innovation playground Idris Mootee

A Few 2008 Predictions (Not Exhaustive) And Happy New Year To You All!

I guess this is the time to make some predictions. This is by no means exhaustive and some are more important than others. Here they are but not particular order of importance other than just some random thoughts at this time of the year in front of my fireplace. If you have some good ones to add, pls send them this way.

Innovation and Design Rules. Marketers' ingenuity will continue to expand as the competitive marketplace challenges brands and even business survival. Efficiency has reached its limit and innovation is the new competitive advantag. Companies will turn to "design" and "deisgn thinking" to help fuel innovation There is no turning back -- and design will rule.

Digital Agencies Rise To The Top. : Marketing will become "Experiential". The category “Digital Agencies” will gain new meanings and power as client demand thought leadership in this innovation-driven environment. Roster agencies based on channel will become redundant as clients look to task based allocation of accounts, covering disciplines and channels. Ad agencies realize the need to change from creating ads to creating experiences but need to team up with innovation strategists.

The rise of the Internet is forcing ad executives to reinvent how they create ads and even changing the way some ad companies are organized. But until now, few advertisers have spent more than 5% to 10% of their marketing budgets online. With the growth of online video and social networking, expect it will jump to 10%-18%, some can be as high as 25%.

Privacy and Radical Transparency: It's the new generation gap, a divide between those who relish privacy and those who doesn’t care a big deal want to show and tell all. For that "don’t care what you know about me" generation will be the new norm. Organization and general consumers will become hyper sensitive to privacy issues. With "digital-intrusion" issues as paramount consumer concerns, marketers struggle to find a balance. With every piece of data requested or collected, marketers will be required to work hard to provide real justification and allow the consumer to control that information. Personalization and certain convenience come at a price.

The Beginning of the Baby Boomers’ Century -from the Beatles to Botox. This is unarguably the largest macro trend in decades, the baby boomer market, defined as American consumers born between the years of 1946 and 1964 and the current aggregate income of baby boomers is $4.1 trillion, and as boomers are in their prime earning years, this much targeted demographic is even more important to - and poses a greater challenge for - marketers than it has been in the past. This powerful generation will determine the survival of many brands and companies. It doesn't matter where the Boomers are in the world; they are the largest buying force in history, for all goods and services and particularly for the travel, healthcare and CPG industry. And three out of four baby boomers say they have no intention of seeking full retirement. So ask your organization if they have a “Boomer” Strategy?

Green Self-image, Sustainable Living and Eco-fatigue. With the environment finally becoming part of the media main agenda, consumers are now actively thinking green, maintaining personal green image will finally become a real opportunity for marketers. Green Apparel: Whether it's fashion-forward, eco-chic or conscious clothing, one thing is certain: Green apparel is hot. Each process, each material used is being looked at with new eyes. Give me a green option, make it effortless, and make it very visible too please. At the same time we will be increasingly suffering from eco-fatique. We will get tired being told and reminded and at the same time frustrated that how little we can do.

Kitchen Appliances As The New Power Tools. Not only will they become the new power tools (I am suggesting Beck and Decker should enter this business), but also the culinary intelligence center. Imagine your kitchen properly organized as a system (like those professional power tools set). Imagine a kitchen capable of running itself: where your fridge keeps track of the family groceries, suggesting evening meals based on what's in stock, each family member’s preferences and the nutritional needs supplied by your dietitian or hemotherapist. It will become the spiritual heart of the home and the new battlefront for marketers.

A few more here:

Social Networks Will Power Knowledge Management. 2008 is when social networking will finally get down to business, not only with career-oriented networks like LinkedIn as well as enterprise apps on other networks, people will figure how tacit knowledge can be captured within corporate social networks.

The Rise and Rise of Apple. With Vista being a major disappointment and annoying nuisance to many, Apple continues its innovation path with new products, soars with brand power and creates true innovative products and experiences, 2008 will finally be the year that Apple rises over Microsoft.

From Handbag to Hand Luggage. Women are carrying more and more in their bad and these bags are getting bigger and heavier. With all these electronics and chargers) competing for space in the handbag with cosmetics and large Bulgari sunglasses. The weight carried in our handbags has grown to such an extent that major retailers like are requesting their suppliers toughen straps and stitching to make them more durable (Unless you buy a Louis Vuitton). However, this is not good news, big and heavy bags can have a cumulative effect on body posture and cause back strain. It is not uncommon to see women carrying two bags these days. The days of small handbag for ladies are long gone. I missed seeing well dressed ladies using those little Channel bags.

Managing The Creative Class Or The Modern Day Working Class "Da Vincis"

People often complain that creative types are difficult to manage if they can be managed at all and many of them are high maintenance in nature. There is some truth here but I don’t necessarily think that is case. My favorite types of creative people are what I called the “Da Vincis”. They are people who can use both sides of the brain. May be this is what Roger Marin refers to as “Integrative Thinker”. I picked up his book The Opposite Mind (while I was stucked in Denver airport for a connecting flight back from Palm Spring where we had a planning session) and I was reading it during this holiday. I buy 10 books a month and I read only one of them. Here is a good one.

“In integrative thinking is such a good idea, why don’t people use their opposite minds all the time? Craig Wynett, head of corporate new ventures at P&G, answers with a great metaphor; he blames our ‘factory setting.’ Like you car’s ignition timing, your computer’s screen brightness, or your washing machine’s spin cycle, your mind emerges from the factory for a specific mode and speed of operations. Few factory settings ever get adjusted, and many of us wouldn’t know how to change them if we wanted to…….your mind setting can be adjusted, if you know how.”

I’ve worked with many super talented and creative people (I don’t mean craft but mental mode) and they can sometimes be idiosyncratic and be careful, as they can become dysfunctional if you don’t provide the right working environment for them. I truly buy into the fact that we are heading into a “creative” economy and these are the people who can provide organizations a competitive edge. If you can inspire, manage and empower these creative classes, it is definitely a sustainable competitive advantage for any organization. Here I provide a few tips to work with the super creative people - level three creative according to my definition, the top in the creative class which people can also apply analytical thinking and reasoning although it is not their operating system. I call them the “Da Vincis”. I have managed and mentor many “Da Vincis” in my long consulting career and it is also something I truly enjoy. Here are four tips and I (you) may come up with a few more:

Let people see and touch creativity:

Creativity is not part of any corporate culture for most organization. Logic overrules creativity 99% of the time. It is important to explicitly inform people that creativity is truly valued and that needs to be reflected in the physical environment. Certain things need to become part of the rituals. Cultivate an environment that induces creativity. Give people the “white space” for them to jam their ideas. Also provide private space for people to work alone (not all creative types are team players). Some people work well when left alone while others find working in a team far more stimulating. Make it a point to identify when people do their best work and treat them accordingly. Do not impose any single formula for all. Spend money on good furniture. Buy Herman Miller (Speaking of which I just ordered a batch of Mirra and Capers chairs for our office today; I am not an Aeron fan)

Creativity and structure can co-exist:

Creative people can be somewhat undisciplined and be reluctant to follow rigid rules. I hate rules too. In real world we have deadlines and milestones, we must make sure that there is “just enough” structure to ensure that they remain on track and follow time lines but not so much as to stifle creativity. Keep reminding them there are more exciting things to do after this otherwise they will drag on and on because they enjoy the journey so much. Just show them more goodies ahead.

Institutionalize “Strategic Time Wasting”:

Any atmosphere of crisis and tension kills creativity. Creative people need downtime to recharge so always give them time to dream. There is nothing called optimized creativity. Exploration requires time and we need to accept the fact they may have “strategic time wasting” mission as part of their job description. . A situation of constant stress does not let new ideas to flourish. We should encourage them to apply their imagination in the workplace and make sure they are appreciated for those efforts.

Have faith in the people that you picked:

Have faith in the process and the people and do not try to micromanage their work. While routine tasks are important, you have to give people the freedom to explore “white spaces” and work out what may seem foolish ideas. Sometimes their ideas need to be shielded from the sharp knives of business constrain, especially when ideas are incomplete or untested. This will create more favorable conditions for innovative ideas to flourish.

Google Reader Goes 2.0? Wait A Second.

Everyone wants to bring new social networking ideas to their product and services, and that doesn’t exclude even Google. They just announced their latest 2.0 features in Google Reader. Google has allowed us to share with our friends our favorite blog posts we view using Reader. You get to select what you want to share. When you marked a new item as shared, your friends who use Reader would see it. Technically, your shared items were on a public Webpage, so they could have been seen by others who are not your friends, Only if those people could figure out how to find that page.

Google is now assuming that anyone you have had a conversation with using Google Talk is a friend, so they'll automatically be able to see and read what you've read and marked as shared. You can still manage your friends list and explicitly tell Reader not to share with some of your newfound friends. Of course, you'd have to know that Google had started sharing your items more widely, which many people apparently did not, even though Google alerted them through a pop-up window.

Google is desperately trying to play in this Web 2.0 space with social networking. It wants to make many of its applications and services more "social," to, for example, tell your friends what you are reading with Reader or cataloging with My Maps. But unlike Facebook, they have n ideas who your friends are. So they jump ahead and assume that anyone you’ve talked to is your friend and that you don’t mind sharing your favorite stuff. Let’s be realistic, not everyone on my Facebook or Linkedin is someone I called a friend. I guess it comes down what’s one definition of what a “friend” is and it differs from time to time.  This is not for Goggle to decide. There are often competitive issues even among my friends and colleagues.

Consider how two of my strategists use Google Reader's sharing feature: to alert another colleague about articles they believe of interest and one of them talked to a ex colleague who consulted with a competitor of one of our client. Do they really want their former colleagues to know what research they are reading related to their current projects? Probably not.

The popularity of social networking sites introduces the use of mediated–communication into the relationship development process. These sites can be viewed within a larger trend that shifts the influence of interpersonal correspondence to mediated messages. In an age of social media, do we really have any privacy? Form Oscar Gandy’s (1993) perspective, we probably do not. Using the metaphor of a Panopticon — an architectural design that allowed prisoners to be monitored by observers — Gandy argues that surveillance systems can exert the same type of control in contemporary culture. He states: “the panoptic sort is an antidemocratic system of control that cannot be transformed because it can serve no purpose other than that for which it was designed — the rationalization and control of human existence.” He calls for an agency to ensure the survival of privacy. Everyone organization involved in social networking really needs to think hard anytime they introduce a new “share” feature. It is amazing how much you can find out about one’s personal life by mining info from these social networking sites.

Social networking sites create a central repository of personal and collective information. These archives are both persistent and cumulative. Instead of replacing old information with new materials, all data are archive–oriented compilations of entries that can be searched and pieced together in an automated fashion. Should we be worried?

Latest Retail Sales Number

There is almost no question that this holiday retail sales in general will be a comparatively weaker one. Total retail sales, excluding automobiles, rose just 3.6% over the previous year (according to MasterCard SpendingPulse), but factoring out spending on gasoline -- which soared thanks to a 27% average price increase since same time last year -- retail sales increased a lackluster 2.4%. Industry forecasts had predicted gains of 3.5% to. There is a definite trend for the consumer to go after the deal, and I suspect this will continue throught the next 12 months at the  minimum. Expect bargain shopping opportunities the next 4-8 weeks.

The bright shots as expected was the  e-commerce sector, which posted a 22.4% gain in online sales over last year, according to SpendingPulse. 7.1% gain for the luxury sectors only. Costco reported strong sales of seasonal gifts and food that more than offset weaker-than-expected jewelry sales. E-commerce is chanigng how tradtional Christmas shopping is being done.  According to Forrester, on average, Web buyers have spent $511 and $313 in stores and online, respectively, during the past three months. In fact, 53% of Web buyers have spent between $1 and $199 online during the past three months, whereas just 18% of Web buyers fall into that spending bracket for their retail store purchases.

In fact, technology has truly come of age and not just from people shopping online, but there are more tech products like the Wii and the iPhone or iTouch and there's so much technology built into almost anything we guy whether it is a key chain or photo frame. But the preponderance of technology, it's shaping all our lives right now. iPhones, Blackberry, Blue Tooth, XBox, these are all part of the digital dictionary for our generation's x, y and z and are actually shaping not only what we buy and how we buy them. Happy Boxing Day shopping.

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Happy Holidays

Nokia's Eco Sensing Cell Phone Brings New Meaning to Connectivity

Social networks are finally converging with mobile connectivity and eco-friendly concepts. Nokia is at the cutting efge of innovaiton again (Motorola, what are you guys doing?) with this visionary concpet of Eco Sensor Phone System. This new design concept consits of a cell phone and compatible sensing device that allows you to stay connected to your friends as well as to your health and local environment. The concept consists of two parts – a wearable sensor unit which can sense and analyze your environment, health, weather conditions, and a dedicated mobile phone. You can also share the environmental data your sensing device collects and view other users' shared data (here's the 2.0 ideas kick in), thereby increasing your global environmental awareness.

The sensor unit will be worn on a wrist or neck strap made from solar cells that provide power to the sensors. NFC (near field communication) technology will relay information by touch from the sensors to the phone or to or to other devices that support NFC technology. Both the phone and the sensor unit will be as compact as possible to minimize material use, and those materials used in the design will be renewable and/or reclaimed.  The Nokia Eco Sensor Concept will reportedly adhere to the following principles of waste reduction:

- Printed electronics. This can significantly decrease the size of a device by an estimated 50% from phones in 2007.

- Bio-materials, such as polylactic acid (PLA) plastics with plant or other biomass-based modifiers and the casing will be made from reclaimed steel and powered by  Kinetic energy

- Electrowetting display - applying electrical voltage to tiny drops of oil, causing the droplets to expand and contract. When compressed under the display glass, expanding droplets produce an effect similar to a pixel “lighting up.

You will be able to choose which sensors you would like to have inside the sensing device, thereby customizing the device to your needs and desires. For example, you could use the device as a “personal trainee” if you were to choose a heart-rate monitor and motion detector (for measuring your walking pace). I think this can easily be expanded into interesting ideas once the participation mechanism is in place. The design is very sleek and with a iPhone like big screen. I wonder if it allows plugging in of additional sessor for feeding of other kinds of data other than environment.  Not sure it comes with an Al Gore speical edition. Defintiely a cool phone, but I will stick to my two blackberries for the time being. Happy Holidays!

Build Your Facebook Widgets In 10 Minutes

Widgets are now part of our every life, a company called Widgetbox is making it even more simpler. They developed a solution that allows users to easily create Facebook applications in just a matter of minutes. We see widget downloads are at an all time high and there is a real demand ti provide developers with the go-to platform for building and distributing widgets, and provides consumers with an opportunity to discover and get fresh widgets for their social networking sites, blogs or personal web pages..

There are free tool enables you to convert your personal blog or Web site into a widget. Developing your own widgets is a breeze. Simply pick a layout for your widget, place the XML feed URL into the box, name your widget, add tags, and publish! It is that simple. Every site that you come across offers widgets. What does the widget do? You can copy the code of any widget and simply add to your Web site or blog, and well, the site where you got the widget from becomes active on your site or blog. Widgetbox allows you to add your widget across a variety of sites, blogs and social networking sites, such as TypePad, , MySpace, Facebook, Netvibes, Pageflakes, Freewebs, Hi5, Piczo, etc. So if you've ran our of ideas for Christmas, how about creating a few widgets for your friends?

Muslim Car? Buddist Cell Phone? What's Next?

Innovaiton is everywhere and I see the coming convergence of religions and new consumer experience. Malaysian car maker Proton announced that they will team up with manufacturers in Iran and Turkey to create the first Muslim car.  The car could boast special features like a compass pointing to Mecca and a dedicated space to keep a copy of the Koran and a headscarf.  I think Volkswagon should create Muslim Beetle to compete. The idea came during a visit to the Middle East by a delegation of Malaysian politicians and businessmen.  I think this is a great idea.  There is a big market with unmet needs for Muslims across the world. What after Muslim car? There is the Christian MP3 player so Christians now have a cool gadget that doesn’t have sin written all over it.  What about the Buddhist cell phone? So what do you get?  Special ring tones that are extracted from Mother of Compassion which is a series of chants and praises to Kuan Yin, AKA Tara in the Tibetan Buddhist tradition. These ring tones will evoke the presence of Kuan Yin for protection, blessings and good health. If if you wish, you can get morning and evening chanting which provides several traditional chants used at the beginning and end of the day.  The more people call you, the more you feel better. And if money is no issue, wait for the special edition Dalai Lama iPhone.

What's next? Let me guess. Shinto GPS, Rastafari iPods, Mormon digital world language translator, Jewish laptops, Zoroastrianism digital telescope. Any suggestions?

"Design Thinking" For Business And Strategy Innovation

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A few weeks I wrote about “design thinking” and explained why they are crucial to any innovation effort. I received a dozen of emails asking me if “design thinking” is being adopted by large organizations. Unfortunately that is not the case, although it may change.

The bigger question is what processes are required to support innovation and how “design thinking” come into play? To use "design thinking" to inspire the exploratory process in the business strategy cycle is first big step. Many companies fail in their attempts to innovate because they lack the balance between business discipline and creativity + imagination.  Generating creative and imaginative alternative futures require applying different frames and references; design thinking can help formulate that. It is drastically different from brainstorming. That’s why I am bringing my designers to senior executives meetings these days, not to design but to inspire and visualize. Roger Martin, dean of the Rotman School of Management was the first in redesigning his MBA program around the idea that "business people will have to become more 'masters of heuristics' than 'managers of algorithms,'" that "design skills and business skills are converging. He has the foresight.

Here I share with you a talk I’ve given a while back on “design thinking”, let me know what you think.

Core Elements Of Strategy and Competition

In business and strategy, there are always elements of chance, timing and luck which greatly contribute to the success in any strategic moves. Many years back I wrote a big research piece on evolutionary theory and business strategy and it was basically a piece of academic work. I wrote about how business and biological competition shares similar pattern on evolution but there is one big distinction-- businesses use "innovation" and "logical analysis" to accelerate change.  That makes it more like a chess game. This is what business strategy is all about. What differentiates a player in an industry may be product performance, features, price, channel, reputation, service etc. , but what drives these tactical decisions?

Strategy is a continuous search for a theory supported by a plan of action that will develop a competitive advantage supported by many actionable ideas to sustain it. It is not about creating a strategy plan as an end state but an iterative process that begins with some ideas of creating customer value. This is where "design thinking"  comes into play in business strategy development. Chasing market share is like chasing after gold at the end of a rainbow. Amazing how many business are chasing the same rainbow.

Not every business deserves to exist, this is a question every one needs to be asking. Unless your business strategy is based on a unique differentiation, it really has no reason to exist. It is very simple, a firm creates value for investors when it earns a return on capital in excess of their cost of capital. In a world of perfect competition, just can only earn a fair return and no more. Those who can break the rules of the game can earn a superior return and then attract other to enter. And drive down the rate of return again. So strategy is about constantly coming up with innovation to sustain that superior return.

It is a no brainer that everyone knows strategy is a pursuit of differentiation, but how many companies are actually doing that or doing enough if it. Differentiation needs innovation, and innovation requires design thinking.

The core elements of strategy are:

- ability to understand the basis of competition within your industry

- ability to see different futures and understand the key drivers of these futures

- ability to use imagination to see customer unknown and unarticulated needs

- ability to predict how a strategic move will rebalance the competitive equilibrium

- ability to manage risk and return with confidence to justify commitment

- ability to create a simple convincing story to mobilize internal and external players

People often asked me about what tools we use to create strategy, I created this deck ten years back for the training of my strategy team, so I share part one here. Have a great weekend.

Illustration: P. J. Crook. "The Chess Players."

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Five Innovation Traps

I have been spending a lot of time with clients and friends lately  who are working or interested in the field of innovation and a few common themes came up. The most common ones are innovative ideas are often immeditealy obscured by curretn business concerns, organization solios and narrow visions. I was showing my clients how different companies approach and show them how we approach it. They were surprised to see that the "what" is very similiar and the "how" is so different. The difference lies in the fact that many treat innovation exercises or efforts as either a series of brainstorming sessions and some creative ideas bouncing around or they see it as another way adding some brainstorning to just business planning. Or some treat it as a stage-gate exercise. Ok let me make that clear. Brainstorming DOES NOT equal innovaiton. Innovaiton IS NOT business planning. The surprise element is when I show them how "Design Thinking" can be used to drive innovation. That's when they open their eyes. Also my slides are pretty.

Whether we are talking about radical innovatio or incremental innovation, there are a number of things that could get us into the wrong paths. I called them "innovaiton traps". Here are the top five:

The Product Extension Trap -  Starting your innovation through a "product develoment" lens and starting early on creating stage gate is a sure way to get you inside a box. Don't need that at all even thought that is part of your intent.

The Product Performance Trap - Too often people are obssesed with competing on the performance front and ignore many human elements that are equally important in creating new differentiation. This is where human-Centered Deisgn can be a great tool for innovation. Not spreadsheets and piecharts.

The Commitment Trap - Lack of immitment to make innovation happen is another key problem. Many simply see it as nice-to-have and not commiting enough energy and resource to make it  a part of an organization day-to-day activities.

The Valdidation Trap -  I have a love and hate thing with this word. As much as validation is key, I often see executives spending unproportional energy in trying to collect data and missed the opportunity to learn and refine early enough. This is seeking improvment in an agile fashion and is more important that looking fo validation. This is where "design thinking" come into play. My company is turning desingers into strategists.

The Boundaries Trap - Innovation doesn't want a box, but it needs boundaries. Settign some boundaries early on helps set context and should not be send as constraints. In fact, it is a pre-condition for effective innovaiton.

Let me know what you think. I'd better be getting back into my meetings. Diagrams by Peter Marks and Mike Tanner.

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Will Linkedin Finally Find A Strategy That Helps Them Take Off?

I don’t know how many of you use Linkedin. I became a paid user since yesterday. Linkedin is definitely one of the very early social network ideas started in the middle of the dot.com bust. For years they had been desperately looking for a business model and I think time has come for one. I think there are plenty of missed opportunities to innovate on the experience front which in turn would translate into greater traffic, advertising or subscription revenue.

I've heard news that they are resigning a new homepage with a focus on providing users with reasons to return more often. On-site messaging is one idea but not a big one.  There should ways to show network activity and that alone will drive traffic. I don’t think aggregation of news is a good idea and I think they are already playing with the idea.  They do need a much stronger presence on the web and without specialty applications that is difficult to do. They do have the options of providing an API and attract some developers. So far the only known partner is Business Week and they will implement a few features using LinkedIn’s API from the information in users’ profiles and associate it with the content in its articles. The idea is to display, via a popup, how many people in a company are directly connected to a user or in the extended network or geographical region of a user.

I am not saying LinkedIn will or will not become the Facebook of business. The number one big big problem is LinkedIn profiles are static and doesn't create a dynamic network unlike Facebook and others. It is simply an address book with some connectivity components. They really need to start thinking what Web 2.0 means for them.  For me, I want people to see the cool projects that I am working on or idea that I have but there’s nothing in Linkedin for that. Everything on my Facebook profile is linked. There are tons of other features I can come up with; I won't go through all of them all here.

Obviously they have been doing a couple of things right. But they have yet nailed the killer experience design needed to make this big. It is still too much of static networked-rolodex, I don’t think the solution is adding more features, but making some of features better and putting some 2.0 ideas to work here.  Expect user based continuous to grow and I think they are at the beginning of a hockey stick if they get this right.

Random Thoughts on Creativity, Social Networks and Experience Design

This is only Monday but things are moving so fast that it feels like Thursday already. For the last ten crazy years or more we have been working long hours, dealing with shocking events, learning to stay connected with others using technologies, trying to cope with the onslaught of data and messages that we can never be able to consume.  Our minds are dealing with data overflow everyday and we are at the limits. I simply cannot deal with the number of passwords I need to remember in order to get my work done. Yes I think we've survived but we’ve spent most of our time trying to catch up. Learning to use a new piece of software every week, sometimes I wish there are more Steve Jobs in this or at least one in every industry. So what’s next, I think the next trend is we are starting to use the power of technology to reconnect to our humanity if we hope to thrive in the coming "creativity” age, where everything else is just commodity.

Social networks are really a wonderful new idea. When everything is moving so fast including people and events, technology acts as a repository so we can store them and to use them to reflect on our personal and societal tempos, as we embrace the power of creativity and daydreaming as antidotes to technology's sensory overload. A Harvard study shows that our minds may wander during routine tasks because daydreaming is the brain's normal state, rather than a distraction. In another words, daydreaming is not just beneficial, it is necessary. I was frequent day dreamer during my grad school days, somehow I did very well. Hmm, I think the theory is right (not when you are at high school). So rather than flattening our senses, we're using it to ignite our creativity, all these MySpace and YouTube and Facebook are the platform of expressions, or platform for identities if you prefer. I see them as platform for “micro-cultures” that allows tastemakers of the future to shape and influence others. I think “usability” and “experience designs” within the contexts of social networking are hugely influential on the future of marketing. It becomes an immediate and powerful source to validate “authenticity” much like people checking on the meaning of certain words from Wikipedia. What we see in these social networks is inflected by issues around class.

Thinking specifically around MySpace and. Facebook, they definitely appealing to two very different class. The”gaudy” nature of MySpace personalization that let people insert large amounts of HTML into their profiles to create busy background images with music etc.presents a contrast with the essentially “modular” and “functional” personalization of Facebook. Facebook’s interfaces do not strike me as “design” savvy or attractive but functional and simple. The use of whitespace and drop-down menus and the use of icons make it relatively uncluttered. There are some visual rhetorics in Facebook’s presentation that connote a somewhat restrained minimalism which is “simple” but not considered “designish”.

Looking at Facebook, one question pops up, “Why focus on design when usability and functionality would seem to be more important?” It is not one thing or another. The reason that HCD is popular because there's the actual consumer experience and people use things that resonate with them emotionally.  And designing in the Web 2.0 world is so different and there are fundamental transitions in the technology that influence how we design. I think as a whole the design industry is strugling with this. In the early stages of the Web, it was about getting from one place to another and finding your way back. Now we're seeing many innovative new ways of interacting with the world. Not sure what percentage of uses remains passive and how for long.  The industry really cries out for a new approach in experience design and usability. I think there are plenty of rooms for innovation.  Some people argue that usability has too often taken on an intellectual and hermetic approach to problems that would require creative and emotional involvement instead to be solved. I don’t think that’s the case.

Another Look At Facebook 'Widgetnomics'

Yesterday I was invited to speak at the Rotman School of Management on Marketing 2.0 and there were a lot of questions and interests around Facebook and monetizing widgets.  Many marketers (and MBA school students) are strategizing about the next cool idea to build tiny branded applications on top of Facebook Platform, then they can step back as users download and distribute so they can sit back and watch it grow.

One student was showing frustration on how impossible it is for them to make money. A lot of people were jumping onto it without a good understanding of the econonmics and some students questioned why people continue to do. I gave them an analogy that many people move to Hollywood but how many really end up becoming a star.  The point is people love doing it even without the money.  Since Facebook started adopting its open-access policy, it has grown to more than 37 million active users. And hrough a partnership with Microsoft, Facebook now places interactive ads on the left and sometimes on the bottom of users' personal pages. In addition to selling its own flyer-like ads that can be posted to particular networks, and it places sponsored info in its "news feed" section, which updates users on the recent activity of others in their network.

Facebook is not worried about third-party developers cannibalizing demand for its own advertising. There is plenty of money to go around. According to eMarketer, advertisers will spend $900 mm on social networks this year. By 2011, that number will reach more than $2.5 billion. Yes $2.5 billion. The top three players will gram 70% of all revenue with Facebook and MySpace being the top two. But having said that, here’s one app does raise some serious strategic issues.

Since Facebook does not allow users to sell ads on their profile pages for obviously reasons. But a Montreal start-up Weblo since created widget that allows people to sell space on their pages in Facebook and others MySpace and YouTube.  The company believes that users are content creators and therefore they should be allowed to do that. Weblo started the service in Oct. In the past month the number of people using it on Facebook has grown from 200 to  more than 1,500.  Expect that number to go up.

Facebook does allow people and companies that design widgets for use on the site to sell ads in the widget interface page, called the “canvas page.” But those widget companies cannot sell ads on the profile pages, either.  Weblo shares ad revenues with the people who let it place ads on their pages.  The question is how long will Facebook allows this go on if it gains momentum, particular after their Beacon announcement over the past month.

Back to our ‘widgetnormics’ discussions which I wrote about two months ago here,  let’s do some quick calculations on these business models. Let’s say a 4-5% daily active rate and 3 pageviews per visit (I think this is a reasonable assumption), an app developer with a $0.50 RPM would need to get to around 900m installs to get to $25m run rate.

If we look at the app with the most installed-base on Facebook - Slide’s Superwall which has around 21m installs. Clearly, so called 'broad reach' app developers need to develop 1/ multiple (2/ high engagement ans stickly apps (ie higher active rates and pageviews/visit than these assumptions) 3/across multiple social networks to be able to get close to this revenue target.  So it is not about one trick pony. Using the same activity and pageview assumptions, an app developer with a $10 RPM would need 46m installs to get to $25m in revenue. Apps with endemic ad opportunities can easily realize this level of RPM but will still need to be in more than two major social networks to get to those installed base. It simply doesn’t make sense to limit your app on Facebook alone. Social network platforms are avenues for distribution, and app developers should be taking advantage of all of them. They need to be cross-platformed. So back to the drawing board for your Facebook widget big ideas.

GOOD NEWS. APPLE SUB-NOTEBOOK IS COMING: There are lots of rumor from multiple sources that Apple sub-notebook is finally coming to the market in 3 months and will be priced at $1500(not bad), there are also plans about a 3G iPhoe to follow.  I have been waiting for this for a while as the current MacBook is a little way too heavy for me (compare to my IBM X series tablet), a new 13 inch (many are guessing that it is 12 inch) LED screen and is 50% thinner than the current MacBook, it uses NAND flash memory instead of a traditional hard disk drive. I should pre-order a few now. I think they will come in black instead of white or silver grey. Have a great weekend!

Driving Strategic Change At Amazon.com

I remember eight years ago I was speaking to a hundred or so of Organic folks during one of our global meetings. I was talking about how strategy happens and how disruptive business models emerge. Someone from the audience asked me a question about how did Jeff Bezos came up with this brilliant strategy of selling books online. I believed she was asking about the thinking process sand if there is magic formula that we can put to use for our clients. My answer was “The formula was simple, quit your job and rent a car and drive across the country from Chicago to Seattle. Make sure you stop and eat at the same places as he did.” The audience laughed.

Over the years many had questioned the survivability of Amazon and questioned whether his strategy was sustainable.  Today, the company has grown beyond an Internet start-up and becoming an institution. On a flight home from Chicago, I was reading the latest HBR story on Amazon and Bezos. This one is an interesting one.  The article looks into what’s different about strategy formulation at Amazon and how do ideas come under consideration, and how are commitments made? The bigger questions was ‘is it a matter of one ingredient—Jeff Bezos—or is it an institutional capability?’ Here are some excerpt, it is a good read:

Who is setting strategic direction for Amazon? At the very beginning it was just you, sitting in a car on the way from New York to Seattle, making all the plans. Are you still making them all?

Oh, heavens, no. We have a group called the S Team—S meaning “senior”—that stays abreast of what the company is working on and delves into strategy issues. It meets for about four hours every Tuesday. Once or twice a year the S Team also gets together in a two-day meeting where different ideas are explored. Homework is assigned ahead of time. A lot of the things discussed in those meetings are not that urgent—we’re a few years out and can really think and talk about them at length. Eventually we have to choose just a couple of things, if they’re big, and make bets. The key is to ensure that this happens fractally, too, not just at the top. The guy who leads Fulfillment by Amazon, which is the web service we provide to let people use our fulfillment center network as a big computer peripheral, is making sure the strategic thinking happens for that business in a similar way. At different scale levels it’s happening everywhere in the company. And the most important thing is that all of it is informed by a cultural point of view. There’s a great Alan Kay quote: “Perspective is worth 80 IQ points.” Some of our strategic capability comes from that.

How would you describe that cultural point of view?

First, we are willing to plant seeds and wait a long time for them to turn into trees. I’m very proud of this piece of our culture, because I think it is somewhat rare. We’re not always asking ourselves what’s going to happen in the next quarter, and focusing on optics, and doing those other things that make it very difficult for some publicly traded companies to have the right strategy.

Do you know when you’re planting one of those seeds that it’s, say, an acorn and it’s going to turn into an oak? Do you have a strong vision of how things will materialize? Or does the shape emerge along the way?

We may not know that it’s going to turn into an oak, but at least we know that it can turn out to be that big. I think you need to make sure with the things you choose that you are able to say, “If we can get this to work, it will be big.” An important question to ask is, “Is it big enough to be meaningful to the company as a whole if we’re very successful?” Every new business we’ve ever engaged in has initially been seen as a distraction by people externally, and sometimes even internally. They’ll say, “Why are you expanding outside of media products? Why are you going international? Why are you entering the marketplace business with third-party sellers?” We’re getting it now with our new infrastructure web services: “Why take on this new set of developer customers?” These are fair questions. There’s nothing wrong with asking them. But they all have at their heart one of the reasons that it’s so difficult for incumbent companies to pursue new initiatives. It’s because even if they are wild successes, they have no meaningful impact on the company’s economics for years. What I have found—and this is an empirical observation; I see no reason why it should be the case, but it tends to be—is that when we plant a seed, it tends to take five to seven years before it has a meaningful impact on the economics of the company.