innovation playground Idris Mootee

How Do You Create Industry Breakpoints And How To Benefit From Them?

I've just delivered an opening keynote in Mexico City for AMAP. The topic was STRATEGY IN THE AGE OF INN0VATION: How do we anticipate and leverage industry breakpoints? A very engaging audience and the weather was great. The keynote was based on the notion that companies should not only aware of when industry breakpoints are happening, they can also strategically create one to upset the industry status and create an environment for a new game.

Most people understand what the S-curve is in terms of technology but less so on what it means in terms of organizational design and strategic innovation. If you are not the no. 1 or no. 2 market leader, then you should consider deliberately creating an industry breakpoint to upset the market leaders. So how does one create an industry breakpoint and are there any pre-conditions? To make that happen, companies must be able to:

1. To learn about the breakpoint potential in the industry and have a sense about when it will happen (through strategic foresights)
2. To commit to making a quantum organizational change (through creating a case for transformation)
3. Having an economic engine (cash flow) to sustain the transformation (and do not take your eyes off from the core as you need it to sustain the transformation effort). 

I’ve seen people making the mistake of getting extreme pressure from investors when their core businesses are eroding and the future business are at embryonic stages. I see industry breakpoints within the beverage industry; consumer electronics industry, fashion and active wear industry and even the advertising agency business.

At the very basic, more executives see the challenges and fail to understand the implications and how to manage them. The bigger the organizations the bigger the challenges are. Most would resort to hiring a top tier management consultancy and after months of analysis the recommendations would either be

1. Invest in a particular product/segment/market that is growing and disinvest in markets that are too small
2. Acquire a growing competitor to add to revenue per share
3. Acquire a bigger competitor to gain better control of the market and increase market power.

None of these solutions are about innovation and worse; their key competitor would hire a management consultancy and came out with exactly the same recommendations. No wonder they are all locked into this zero-sum game. The reason people come to us is our ability to bring imagination and strategic foresights into the strategy process and creating new ideas not only to reinvent the core but also to re-imagine the future. So how do you recognize industry breakpoints? Here are the early signs:

1. Falling demand for standardized products
2. Declining margins in the industry due to low cost good value competition 
3. Rationalization of the availability of new sources of supplies or technologiesas amplified signals
4. New entrants pushing a new value curve supporting by different economics
5. New entrants/existing competitor promoting new behavior that can be disruptive And remember, it is far easier to try to create an industry breakpoints then reacting to one.

Many companies come to this too late and it is a lot harder to innovate when market share and earnings are under pressure. When earnings are under extreme pressure it will affect CEO’s credibility and even a good strategy can be misunderstood by analysts and critics.

What Every Innovation Manager Needs To Know About Value Creation? Let's Start With Something Simple.

What is value creation? Something commonly used in strategic discussions but not well understood among managers as well as business or design school students. If a company needs to reinvent itself, they need put value creation first. If a disrupter wants to attack an industry leader, it needs to put value creation first. If your company want to grow your way to greatness, put value creation first. If your company wants to stay relevant, put value creation first.

There are many practical issues that affect value: from the nature of owners and investors to the shifting perception and behavior of the financial market, smart and foolish ways to invest, divest, reorganize and acquire etc. At the very core, it is about how companies create value by investing capital to generate future cash flows at higher rates of return than their cost of capital. And how different ownership structures and organization designs could affect value. Here I am talking about one level below.

For business managers, technologists and design professionals this means creating value with everyday decision. Value is the source of competitive differentiation. Here are a few ideas for you to think about:

• Every innovation manager needs to know or consider constantly how each new ideas will benefit consumers and in what way whether helping them to perform, produce, organize certain things or feel certain way. Value can be both tangible and intangible. Customer value needs to be created first before you can think about capturing them. Value creationn before value capture.

• Every innovation manager must understand and better than their competitors at understanding where, how and why value is created and destroyed within your industry and your company. Not only by business unit, by product, by customer, by channel, by market, by technology, or whatever that best reveal your formula that drives value creation.

• Every innovation manager needs to know how their decisions will enable the organization to create, deliver and capture new value from change and foresight. By bringing new perspectives, they can help executives to make better future-informed decisions that create value.
• Every innovation managers need to stay focused on the objective of creating value through purposeful innovation. Don’t be distracted by other management measurements and indicators that don’t build organizations (they are for managing organizations, not building them) and avoid the trap of spend time managing the lagging indicator rather than creating real value for the future.
• Every innovation manager needs to remember that creating value is also about managing expectations. They need to accept that even great ideas will fall flat and some mediocre ideas will be successful and timing can be a key factor. Avoid "short-termism" and confusing product extension is innovation. The best way we can build successful innovation that delivers growth is by putting value creation first.

A misunderstanding of “value” is causing many companies to be “recklessly cautious” or "creatively overwhelm" and forgetting that they are competing for tomorrow’s market and cash flow – not yesterdays. And by their “short-termism” they are passing up terrific opportunities to create long-term value. “Short-termism” is not good for innovation.

Interactions Design Will Enable New Social And Cultural Behavior. How Do You Research These Emerging Behavior And Their Implications?

Back from London and a very productive week. Many are still sadden by the loss of Steve Jobs. I quote Ginsberg: "I saw the best minds of my generation... angelheaded hipster raging or the ancient heavenly connection, in the machinery of night...". The world misses Steve Jobs.

Apple said he had been "the source of countless innovations that enrich and improve all of our lives" and had made the world "immeasurably better".VC and ex-Apple executive Jean Louis Gassee - who Jobs recruited to Apple - said that Jobs should have 'seven statues' built for him - 'One for the Apple II, one for the Mac, one for Pixar, one for coming back and reviving Apple and the Mac, one for the iPod and iTunes, one for the Apple Stores and one for the iPhone. This picture of Steve was taken in an emotional moment knowing this was his last keynote.

Everyone is obsessed with Apple and how to disrupt the master disrupter, but what everyone is doing is either copying each other or try to make small changes to Apple’s designs without the power of the Apple brand/user experience and the powerful Apple ecosystems behind them. Let’s say if your army has the same uniform, equipment and the same Hummers as the US military doesn’t mean you can compete with the powerful military intelligence system linking everything. Apple is a system with central command and control with highly sophisticated logistics system and deep R&D budgets. It is truly a textbook example of sustainable competitive advantage.

Most companies got it wrong when they believe 1/They think Apple is only about clean design and nice features 2/They think what they do is easily replicable 3/They think people are willing to save some money buying a non-Apple substitutes. Look around how many MP3S out there and how cheap they are, anyone buying them? The same can be said about tablets.

We’ve spent a lot of time on researching the future of ‘devices’ or ‘personal technology’. It will be the single largest growth opportunity for the coming 10-15 years and will eventually be bigger than the PC business. It is the next game. I am not talking about mobile phones, smart phones or tablets. I am talking about a convergence of these portable devices that utilizing haptics, gestures, facial, biophysical, voice, movement or any combinations that could create novel ways of interacting with a devices or entertainment appliances.

There is simply no way to predict what would become the dominant interactions paradigm of the future and which one will prevail and which one is transitional. Is multi-touch transitional or something will come and leapfrog this intereaction paradigm?

Apple is milking everything ‘multitouchables.’ One of the latest idea is the Apple's Magic Mouse may include multitouch display. Earlier this year Apple filed a patent application on a multi-touch mouse that can display information and allow users to input directly from the mouse such a number keypad. The screen would then change to a different functionality for each application when they're switched between active and non-active and depending on whether you’re play games or chatting with friends. I think the next one would be a multi-touch Macbook cover that let you do things without opening the laptop. That would be a nice crossover to bring some tablet functions to a laptop. If I want to play music with my Macbook I may not need to open it.

And Apple is getting close to offering cloud-based movie streaming,working with Hollywood studios to get movies streaming through iTunes. LA Times this week said that Apple was hoping to get that service off the ground by the end of this year, or early next year. Apple now streams TV shows and movie to devices like the Apple TV, but Apple TV has small penetration. This would add that feature to purchased content, and widen the range of devices that could stream and most importantly iPads.

Functionality available through the input device is something worth exploring. When we do research work on how devices (or tools) from both an anthropological and design perspectives evolve and how they shape our everyday interactions, we see emerging complex cultural artifacts that connect different kinds of social and cultural practices.

The increasing emerging interactions and sociability makes the behavior hard to research using conventional research approach. The three main central affordances of the personal technologies for social actions are 1/the very personal nature of these devices (at least more so in the west) and getting more personal with increasing access to critical information and 2/ the idea of anytime anywhere always on, everyone and always connected 3/ the sensing and reacting capability of future devices. Like many I carry my Blackberries around in the office, at home and everywhere I go. Many of us are tied to our iPhone/iPad/Android phones/Blackberries and must carry a functioning smart phone at all times. For our research, we focus on how multitouch can interact with geospatial information and on how other modalities can be combined to enrich the interaction with spatial differences. We have a lot of very interesting findings. I may share some here next week.

Thank You Steve! Let's Type This On Our Touchscreens "We Will Miss You Steve Jobs."

It is a very very day with the news that Steve Jobs, who has died aged 56 following a long battle with pancreatic cancer. The world has lost a visionary, not only he made an unprecedented impact not only on the world of computing and consumer electronics with insanely great products that inspired a generation of people to dream big and be different, he has also reinvented management by building and rebuilding one of the greatest companies on earth. His creative and innovative spirit and remarkable accomplishments will forever be remembered by all of us.

Steve was the most creative person on earth in business I’ve known of. His creative spirit will inspire many for decades to come. You wonder what’s makes Steve so creative? And what is creativity anway? How creativity happens? How do we prepare ourselves for creativity? Do you have to be a whole-brain thinker? Or you only need to be a rightbrainer? Are there many more young Steve Jobs out there?

Creative individuals have a few distinctive features that distinguish them from their peers: They have a rich body of domain-relevant knowledge and well-developed skills, also they find their work intrinsically motivating (Simonton 2000; Amabile 1988). They tend to be independent, unconventional, and more risk-taking, and to have wide interests and a greater openness to new experiences (Simonton 2000). Steve met all those criteria and was a perfect archetype of a super creative person.

Creative individuals also tend to have a strong “discovery” orientation, which leads them to look at situations from different perspectives at the same time, to frame problems differently, and to ask novel questions. Some academics and creative managers like to describe creativity as a process, I belong to the school of Vinacke that believes creative thinking in the arts does not follow a model or any models. Ask any top creative talent, see if they follow a process. I never like the idea to reduce creativity to a five staged process. It is simply not creative to do so.

The best creativity comes from managed chaos and applied fuzzy logic. It is never about careful calculations and you simply cannot engineer lucky accidents. It is also about committment to make change, it is a powerful motivator for creative people. Design Thinking helps organization to improve its creative and imagination capability, but it is not a creative process. Creativity has no process. Don’t waste your money on any books. Just read Steve Jobs’ story.

Steven Paul Jobs, management guru, creative visionary, businessman, born 24 February 1955; died 5 October 2011.