innovation playground Idris Mootee

Is "Design Thinking" Helpful For Business Or It is Exporting The Dogmas Of Design To Business Strategy?

Is "design thinking" helpful or It is exporting the dogmas of design to business strategy? Photos here are the Idea Couture D-school + B-school bears, we are having an art bear competition with the goal to customize 50 bears to be used for display in our new San Francisco office. I hope the bear collection can reflect on our diverse multi-disciplinary team, IC is a place where MBA meets MFA.

Is "design thinking" a hype? This deserves a broad and deep debate. I have no intention to bring this to a quick conclusion within a few hundred words. But it is worth discussing and hopefully inspires more meaningful dialogues. There is a lot of interest the last two years on “design thinking”; business was desperate looking for the next big thing that can become the management wonderdrug or at the minimal management Viagra.

Corporations are facing crises on several fronts, not only from low cost competition, economic and sustainability and social development: business leaders and governments are experiencing a profound crisis of trust and legitimacy. All or these triggered a loss of confidence in our old ways of doing things. The very core of many management theories are being questioned and “management ‘is close to a point of failure. People need to find something to make sense of what’s going on and organize for the future of unprecedented uncertainties.

Battered by system level economic failure, extreme uncertainties and the failure of traditional forms of leadership and management, many are gazing hopefully towards design thinking as a new management wonder drug that will help them make sense of what is going on and secure their next big bonus, election or promotion. Yes, design thinking is bringing a refreshing approach to management and strategic thinking, but it is far from a wonderdrug.

Will “design thinking” flounder in 2013 much like many other short-lived management fads? Or it will change business forever? Traditional design firms (and even branding ID/logo design studios) are quick to claim that they can change the world. Yes with a new slogan or a new kettle or toaster?

Corporations will be disappointed with the promise from these firms claiming their designers will help turn their companies around. Many of these companies hardly understand business strategy, industry dynamics, channel economics and capital intensity etc. Yes, adding a few MBAs do not make them a strategy consultancy and change requires more than just sexy designs and catchy slogans. Here are many ways to see “design thinking” and this is probably not exhaustive:

• Using design thinking as a way to instill customer-centricity and empathy
• Using design thinking as a means to solve complex problems
• Using design thinking as a methodology to foster exploration and experimentation
• Using design thinking as a design buzz word to tell you a designer can do more than design
• Using design thinking as a management buzz word sold as the “next” strategic tool
• Using design thinking as marketing slogan or tag line

The design community honors people such as Steve Jobs as one of the top design thinkers, people like Jobs are not only smart and creative business leaders, they are master strategists and entrepreneurs. I am not sure if their success is a direct result of premeditated "design thinking" effort. If you ask Steve Jobs if he is a design thinker, his response will likely be “What’s that?” There is even a business school case study of “Steve Jobs and Design Thinking” that is fiction writing indeed.

No question “design thinking” is overhyped, much as MBAs have been overhyped for years and people think that it could overnight transform them and every MBA grad is a strategist, that is hardly the case. Design thinking has a lot of value same as any high quality MBA degrees, the question remains… is it time for us to rethink and reinvent design or it takes a new organization to redesign design? IDEO is the IBM of design; well-respected founders and great people, but are they ready (and capable) to do more given their legacies? Idea Couture is a start-up and has a limited history; we’re built from the ground up on day one as a place where D-Schools meets B-Schools, can this model work? Is it scalable at all?  Will this experiment fail? Or can we become the next hottest innovation shop globally? What other firms are out there are experimenting with similar new organizational model to take on these challenges?

The transformation of design agencies to strategy consulting firms is an interesting idea but extremely challenging one. The term “design thinkers” also implies that designers are craftsmen and not thinkers which sometimes is not the case. On the other hand it is definitely an 'overstretch’ for traditional design firms relying on the “design thinking” promise to solve strategic issues. It involves a big cultural change. It is like asking Microsoft to embrace open source and that's a complete cultural change. Design firms need to think about cultural transformation for themselves before they are ready to learn to do it for others.

You're Smart Doesn't Mean You're A Good Problem Solver. Putting More Smart People On A Problem Might Not Be The Answer.

Early breakfast in a Boston hotel and ready for an executive workshop. There are so many decision to be made in one day and just over breakfast we're made several important decisions on some strategic issues. I realize 70% of my time on a day-to-day basis are spent on problem solving - organizational, strategic, customers, people and resources etc. It is pretty much the biggest part of any managerial job. Problem solving skills development is therefore critical for young managers.

You’re well educated, highly intelligent and have a well-respected job in your chosen career, it usually mean you are a good problem solver both in professional and personal settings. Professor Yiorgos Mylonadis at London Business School research is thinking otherwise. His recent research shows that people can be extremely well educated with many years of experience, they may be successful managers who have accomplished great things, but frequently their ability to solve a problem is severely limited.

I think there is a lot of truth in that. The reason being how we look at (frame) the problem or how we structure to solve them. I’ve helping client to solve complex issues for decades, often individuals have a good idea of what the issues are, but they are not sharing that in a large group setting simply to avoid saying the wrong things (or not the right things), and ending up resulting in group-think. I see this all the time, one smart person can make a quick decision to solve a problem, two smart persons can frame an issue better and share perspectives and ten smart persons often have no idea of what problems they are trying to solve.

Professor Mylonadis suspects that the reason that our problem-solving ability in management is limited is because our models of problem-solving are devoid of people while actual problem-solving isn’t. As useful as a decision tree might be as an analytical abstraction, the issue is how do you actually define a problem with the help of others around you? Who should these people be? What kind of input should you be asking from them? Which part of that input should you disregard? Which part of that input should you take into account?

He furthers, “If you look at engineering or architecture the ability of people to explain the problem they’re working on, and ask questions so they can get feedback is very high without their need to resort to either dogma or trivia. They are helped by reference to blueprints which are a highly codified way of communicating. Our equivalent in management is jargon. Like blueprints, jargon was invented to make our exchanges efficient (we all know what is meant by a “functional organization”.) But the analogy to the blueprint ends when jargon becomes meaningless. It is also a sure way of eradicating any arguments left standing from the onslaught of dogma or trivia.”

I think defining or framing the problem is the most important first step. Many experienced executives or senior creative folks who supposed to be professional problem solvers, are confused with the terminology of problem solving. They confuse problems with causes, and issues etc. What is the definition of problem? The driver of solving any particular problem needs to be fully understood. Problem solvers should start their problem solving projects from the definition of drivers and then look at the possible ways that we can go about solving it? Some other question to ask before starting to come up with solutions:

• Can you solve the whole problem? Or just part of the problem?
• What would you like the resolution to be? Can you picture it?
• Can you make education decision based on limited information available at hand? How much of the unknowns are out there?
• Have you taken into account all essential notions in the problem?
• Do we want to solve the problem for good or just want to deal with the symptoms for now?
• Have other tried to solve this before and were they successful? Why others have failed to solve the problem?
• Is the problem shifting or changing over time? So time is the essence? What do you need to do at this time? Or will the problem go away naturally?
• Is it a problem at all?
• By solving this problem will we create more problems?

It Is Time That Google Needs A Reset. Now Facebook Places. Next Facebook Faces. Then Facebook Realtime Mobile Directory?

Here's Simon and Ashley as part of a team working on a social strategy for a very cool company. Part of the mission is to look at their competition and coopetition. In the world of business strategy and competition, friends can become enemies overnight. Google is definitely not happy with the idea that Facebook is sitting with 500 million users with 50% very active. What can they do?

Back in 2002, Google was competing with Overture and other search engine for shares. Overture was the search leader and was mining 3.2 billion pages, roughly 70 mm more pages than Google. Shortly Google climbed to 3.3 billion pages and continued to extend the gap. Soon after Overture bought the Web search assets of AltaVista and Fast Search and Transfer (including AlltheWeb), to compete with Google head on.. and the battle began...

Google won AOL business away from Overture; and Overture won Freeserve away from Google. We will be seeing the same battle all over again when this time Facebook is the rivalry? Google is the place to find anything and that is extending to places with Google Map and Street Views. “Local” is still hole in the Google world. Facebook Places is an innovation to fill that hole with a social-media twist. Facebook users can now "check in" to an existing list of nearby locations from their mobile phones or add new listings themselves, sharing that activity with their friends.

Facebook will potential become a platform for local business search listings, the same strategy that Google, Yelp, Foursquare, Gowalla, and a few others that are fighting to get local advertising dollars. Facebook Places is the latest example of how information access is empowering new behavior.

We don’t know if these behavior will become mainstream. It is not difficult to imagine that I will be able to use my Facebook app on my mobile device to find local business. I won’t have to open my laptop and Google a restaurant if I can just use my mobile device, with added comments and suggestions from my social networks. Facebook's decision to add location data to its product instanly creates a Google-scale competitor overnight. With so many businesses already have Facebook pages, it is easy to pay and extend that into Facebook local search. So pages + places = Yellow Pages + instance update on products + prices right in your pocket.

Today, 100 million people a month are using Google's Maps for Mobile product but it doesn’t mean much in terms of barriers for entry, at least not for Facebook. Google knows very little about me other than what I search but Facebook knows my friends, communities and what I am passionate about. Google needs a reset. Buy FB stock if it goes IPO.

What Game Theory Can Teach You About Online Dating? There Are Plenty Of Room For Innovation And Money To Be Made.

A few days on the beach is too much for me.  But perfect place to write my blog posts. Watching these love birds on the beach, I started to think about game theory and love. What advice an economist can provide for online dating service by applying game theories?

Finding a spouse is a game, a serious and sometimes high risks (high reward I hope) game. We are looking at different types of network behavior (the high demand princess, the career type, the girl next door and the appearance-over-substance-and-insecure type etc. We all kind of know how the game works, and some people are better at it.

A quick primer on game theory: Game theory is a branch of applied mathematics that is used in the social sciences, most notably in economics, as well as in evolutionary biology, engineering and military strategy. It attempts to mathematically capture behavior in strategic situations, or games, in which an individual's success in making choices depends on the choices of others, pretty much like chess game.

While initially developed to analyze competitions in which one individual does better at others expense (zero sum games), it has been expanded to treat a wide class of interactions. Imagine, an online dating service that only the super attractive can join? Or the super successful? Or dating only for virgins? Or lawyers dating lawyers? How niche we want to get? Using these examples, anyone looking for an opposite (or same sex) can exit once they find the right person.

Imagine a dating site for the super gorgeous and handsome. Every member’s preferences is based on looks, and therefore their payoffs are equal to how good looking their partners are. Although good looking is subjective, it is also quite objective compare to other factors. There are easy ways to use a software algorithm to identify what features are considered good looking plus information on weight and height.

In this game, everyone is looking for the best looking person and share the edge with the ideal partner who can maximize the rewards from such a relationship. Since everyone is attempting to maximize their rewards.

It would start with the most attractive woman or man finding the second most attractive partner and exiting the community with maximized rewards from both parties’ ends. Then the third most attractive person, seeing that the prospects of at picking the most attractive person or the second most attractive person, will settle with the fourth most attractive person in order to maximize rewards, and the thing continues on and on.

When people exit the system, the next most attractive pair will become the optimal choices in the community for each other. This model does present many problems, if you are not among the best looking; you simply have to wait for your turn. Other factor includes timing, if an attractive person enters the community at a particular time, it will change the order. You may be pushed back to the wait list. I will need a few hours to build a spreadsheet modeling out the different outcomes. I also need to add the factor of “desperateness” too. What if we are not talking about just appearances?

Let’s introduce another element- virginity. OK this real, a husband and wife team decided to create an online dating site only for virgins, called YouAndMeArePure.com, It primarily caters for virgins to meet other virgins (not sure what's the average age of their members). Imagine everyone there is a virgin, and then I wonder how age plays a key factor.

Unlike other dating site, you can always go back to the game if the matching doesn’t work out. In this case, you only have one chance. Because if you lose your virginity, you can no longer join this dating site. So technically, there is only one chance for both parties. This changes the game dynamics totally.

If we apply game theory to this business, the first and most attractive virgin will be gone quickly, but age may play a key role here. I am not sure a 45-year-old virgin, no matter how attractive, will get to the top of the list. So how does that change the game dynamics? This complicates the business rules. I need to spend the next few days on the beach to crack this one.

I don’t know exactly how the rules work since I am not a member. You obviously have to be a virgin to join, or you’ll have your membership evoked once you’ve lost your virginity. Not sure how they validates that. Yes you can buy gift certificates and V-Cards that ID your V-ness (or degree of V-ness) on the site. I am not sure if you regain your virginity through surgery counts (if you’re female). Or they are forgiving to those who lost their virginity by all kinds of accidents.

I am already spending too much time here; I should be applying my game theories to something more useful. Such as when Blackberry enters the table market how Apple should response. Enough talking about virgins.

Three Book Reviews For Your Summer Reading: Innovate The Future, Seizing The White Space; and The 24-Hour Customer.

I’ve a stack of books sitting on my coffee table waiting for me to write a review. I am reading less and less lately, from a historically high of 4 books a month to now 15 books a year. But I am buying more art books. And I review 2 dozen of books a year. My magazine subscriptions have been cut down from 40+ magazines to less than 10. Many including Wired and Forbes have dropped off from my list and I stop many of the journals, many are just repeating old things. It is like digging out bones from one graveyard and put them in another one.  I’ve picked three books to review and share with you this week:

First one is Innovate the Future: A Radical New Approach to IT Innovation by David Croslin (Pearson-Prentice Hall Professional 281 pages). The author is the president of a consultancy specializing in customer, product, and market innovation and previously served as Chief Technologist at Hewlett-Packard's $12 billion Communications, Media, and Entertainment division.

The book is organized into four parts:

• Understanding Innovation--the difference between innovation and invention; 
• Business and Technical Life Cycles-- product lifestyle, market life cycle, and stagnation challenges;
• Targeted Innovation-- innovating to dominate, conquer, or disrupt;
• Innovation Deployment-- valuing innovations and bringing them to market.

The book is organized in a very practical manner. The author brings out an important distinction between invention and innovation, which I think many are still confused. Patents are granted for inventions, not innovations. And customer buys innovative products, not inventive products. If you use this lens, more than 50% of products out there should not have made it into the shelves. I particular like the term used frequently in the book “Transformative Value”, it talks about how the three planes of idea, invention and innovation and how transformative value is needed to move to the next plane.

The author also identifies three innovation inflection points from a product sales perspective:

• Market Dominance Growth Flattens: As the acceleration of market dominance drop to a steady state when incremental inventions no longer act as disruptive innovation aftershocks.
• Customer Acceptance Falters: When incremental invention no longer drives an increase in the transformative value, customer begins to react negatively about paying for further incremental improvements. Similar to the idea of the S-curve.
• Customer Acceptance Ends: When negative incremental inventions become destructive inventions, the transformative value drops precipitously and customer no longer accepts cost increases.

This is a good book for beginners and provides a good coverage of innovation and product development for undergrad; I am not sure what they subtitled it as “A radical new approach to IT innovation?” It is really not about IT, it is a somewhat misleading title.

Seizing The White Space: Business Model Innovation for Growth and Renewal (Harvard Business School Press 288 pages) by Mark W. Johnson. Mark is chairman of Innosight, a strategic innovation consulting and investing company, which he cofounded with Prof. Clayton M. Christensen.

This is a very popular subject and there is a lack of books on this subject. The cover is nicely designed. The author starts with a simple framework for analyzing and creating business models. The framework is composed of four boxes: the customer value proposition, the profit model, the processes, and resources of the business.

• The customer value proposition delineates why the customer values the product or what the customer hires the product to do (the Christensen’s jobs-to-be-done metaphor which is getting a bit old to be honest and they had a good run with the idea).
• The profit model encompasses all the crucial financial dimensions that determine viability, including the revenue model, cost structure, target margins, and velocity (there is an over simplification on this one).
• The resources and processes boxes consist of what the business needs (people, technology, information, partnerships, etc.) and how the business delivers the customer value proposition within the bounds of financial viability.

The author uses a four-box definition of business models throughout the book to analyze different case examples and to illustrate a hopefully repeatable process of building new business models. The book is a good general read and is well written, but does not really contain any new ideas. I have a high expectation from this book but frankly a little disappointed. The business model thing is pulled too far away from other pieces of the innovation puzzle which are not addressed Johnson’s idea is to explore of white space and business models with a view of how that can fill their growth strategy gaps.

The author's approach to business models is overly and deceptively simple. It is like skipping three books and jump straight to business model consideration. My other disappointment is also in the case example used, Amazon, Apple iPod/iTunes, Dell, Zara, Tata, Southwest Airlines are very overused.

The last few chapters talks about how business model can be a repeatable process. I am not sure I agree with the approach, I wrote on the subject of Business Model and Business Strategy extensively hoping to bring some clarity to the topic. A recent survey found that more than 50% of executives believe that in the future, business model innovation will be even more important for competitive success than product or service innovation, so this book is clearly addressing the demand, but not providing enough rigor to deal with the subject.

The author addresses in the last chapters the inevitable challenges that always accompany changes especially when it is as radical as in many of the case studies. In particular, the author shows how it is all too easy for new strategy to be severely undermined when the incumbent management try to force it to live within existing business models. Again not a newly discovered insight, I was really hoping for something more.There need to be a follow up book to explain the "hows".

The 24-Hour Customer: New Rules for Winning in a Time-Starved, Always-Connected Economy (Harper Business 240 pages) by Adrian Ott . The author, founder of a consulting boutique Exponential Edge, is a consultant based out in SF with a prior 15 years of experience with HP. The central thesis of the book ultimately comes down to: Consumers aren’t only pressed for cash; they’re also pressed for time. As such, helping customer to save time can help companies have built profitable businesses.

She proposes a 4x4 consultantish quadrant to help looking at the these opportunities. Her framework relates a customer’s propensity to spend time with the propensity to pay attention. The significance of the stratification Adrian uses is that in order to play in one quadrant, one needs to develop specialized strategies and tactics in order to win in that quadrant.

As an example, to play in the “Habit” quadrant, one often has to understand the everyday routines of the customers. Ott cites the example of P&G’s Febreeze, which was a great product but initially failed in the market because people forgot to use it. Once P&G helped to tie the image of Febreeze with the notion of the daily task of tidying up a room, Febreeze turned the situation around into one of the fastest growing brands. Not sure this is the best example, this is more of another 'job-to-be -done" type of approach. I think there could be better examples to illustrate her framework.

The idea of time-value economics is not new, the author did a fantastic job in providing a fresh lens to help innovators to look for new opportunities in a systemic way simply by asking the questions "What is competing for the customers' time?" and "How to provide value to this context that is greater than what the customer realizes today?" 

At a time when most businesses are struggling to find new source of customer value, Adrian’s fresh approach to time is value is a breath of fresh air. This book is worth adding to your summer reading list. Even advanced marketers can still benefit from this book. I think the publisher can use a better title than the current one. Honestly the content is more attractive than the title.

What Is A Social Enterprise? There Is Still A Lot Of Debate?

Social enterprise is a hot idea. Being asocial entrepreneurship these days is way cooler than being a iBanker. I think we are only seeing the beginning of a long term trend, people realize it takes a new kind of enterprise to solve the world’s problem. And NGOs are not the solutions. Getting donations and acting as administrators are not adding enough value. They need to start thinking how to create value – here comes social enterprises.

We don't have a good definition of what is considered a social enterprise. Are they in the business of making money or a new kind of “non-profit?” Or “not-just-for-profit" company with a double or triple bottom-line? What’s the percentage of profit that they should retain in order to claim or to qualify as a social enterprise?

More questions: Who should be funding them and what is an acceptable rate of return? What kind of retained profit should they keep? Should they use the money to grow the business or given them out for social good (at the expense of the future growth of the enterprise)? What kind of social value must the enterprise create to be considered “social”? Is green considered “social”? Is healthcare in developed countries “social”?

Creating a start-up is hard enough? Creating a start-up with a social mission is harder? Creating a start-up that is profitable is not easy? And worrying about generating too much profit is an additional challenge. So what is the priority of a social enterprise? Should social enterprises be pushing for more efficiencies and economies of scale the same way as corporations do today? In that case, at what point it is at the expense of social good? All these questions warrant a lot of debates, no easy answers.

Social enterprises require creativity, passion, commitment and the right combination of investments and talents. I've seen a few interesting ideas from students' competition and here is one that I like.

MaloTraders: Founded by Temple University student Mohamed Ali Niang, MaloTraders' is in the business of  processing, storing, and marketing of rice for small-scale farmers in Mali. By making local production more competitive on the international market, MaloTrade is working to alleviate poverty. Malo Traders’ social mission is to alleviate poverty, combat food insecurity, and eradicate malnutrition in Mali.

They aim to accomplish their social mission by minimizing post-harvest losses of small-scale farmers utilizing modern technology, increasing profits of harvests by creating an efficient rice value chain, and fortifying rice with micronutrients such as vitamin A, iron, zinc, and folic acid. The plan is to create the first brand of Malian rice and adhere to international export quality standards. A social brand for rice, that’s a good idea.

From A Behavioral Economic Perspective, I Think Many Of Us Are Considered Imcompetent As A Consumer.

We have to deal with economic decisions on an everyday basis without knowing it. Here’s a few example of what I have been dealing with the last two days. From buying a pair of sneakers to using the iPad.

I discovered a little animal trapped inside bottom of my chimney since a few days ago, it finally climbed down to the fireplace just yesterday, and it was a little squirrel. The front of the fireplace was covered with a screen luckily so I didn’t end up chasing it around the house. After a short while it climbed back up to the bottom of the chimney. So we could I do?

If I call up the wild life people, it will cost me $300 to dis-invite the little animal. If we leave it up there, it will eventually starve to death. If I let it out, I would risk it running around hiding in the house instead out heading out the door. It is not an easy task to find a small animal in a 6,000 sq feet home with lots of little hiding places. I definitely won’t be spending $300 every time one of them decides to pay us a visit.

So I ended up borrowing a trap from my neighbor. It was left inside the fireplace for the night and I stocked it up with peanut butter bagel, a slice of apple and some peanuts. Next morning, I got it trapped. I fed it with water, more food and did a little lecture why he should never come back, then took it to the park. He didn’t say goodbye and ran up a tree, rude. What would you do? Would you spend $300 to have someone remove it or leave it to die up there? We are dealing with economic decisions like this all the time.

Here is another one. I was looking for a pair of sneakers and couldn’t find my favorite blue Adidas Gazelle. Almost given up but then I saw a pair of Converse, nice gray color. I am not a Converse fan and for whatever reason, today I bought my first pair of Converse. The sales person told me I could get the second pair for 50% off. So do I need another pair? No, I’ve enough shoes to last for 3-4 years.

But I did eventually buy another pair the same color but a high cut design. So their marketing tactics worked. They got me buying more than I need, although they made less margin on the second pair. That's a bad consumer decision, buying things I don't need at all just because there is a discount.

Another common one is reusable shopping bag. A lot of people still have not developed the habit of bringing their shopping bags including myself. We know we should, but we always forget. Do we end up buying more additional reusable bags? No, we go back to single-use bags. When people think that they have already paid for being green but they forget next time, they’re not willing to invest more in their behavior. Another bad consumer decision.

What about the iPad, I love that device but I really have no need for it. I bought one for myself, sometimes carrying it around the house but have no idea why. No idea why spending $700 buying it in the first place and why I am carrying it around in the house like I am a waiter taking orders in a restaurant. Can someone explain this behavior? Do I want it? Do I need it? Do I like it? Do I even use it? Worse, I've actually spent another $50 on useless widgets.

There are a lot of holes in the field of behavioral economics. Behavioral economists are sticking to a few simple theories. We know that people value changes from reference points (but know little about what points of reference are, and how multiple gains and losses from reference points are integrated), that expressed preferences are constructed much as people heuristically approximate solutions to different problems, that categories of wealth are not added up when people make spending decisions, but we know little about the detailed cognitive structure of their “mental accounting” of "wealth categories."

Let’s imagine we have a diagnostic tool, to measure when present people with images of new products and asked them to choose which they like most (measuring “wanting”). Then we separately measure how much they actually like using that product (“liking”). If wanting and liking brain activation are different, a consumer could be judged as incompetent. I think as consumers, many of us are simply incompetent. My iPad one is a perfect example.