innovation playground Idris Mootee

Five Critical Questions About Organization Culture That People Avoid Asking.

There is a piece on HBR Blog on the topic of organization culture “Culture Takes Over When the CEO Leaves the Room” by Frances Frei and Anne Morriss (both HBS professors). It is a good piece worth reading and here's an summary of their ideas:

Excellence = design x culture. Your job as a leader is to get both right. You must build a winning structure for your organization and then foster the often unspoken rules and values that will bring that structure to life.

But if we may be blunt for a second, what the hell is culture? And how exactly do you get any better at it? In short, culture guides discretionary behavior and it picks up where the employee handbook leaves off.

Culture tells us how to respond to an unprecedented service request. It tells us whether to risk telling our bosses about our new ideas, and whether to surface or hide problems. Employees make hundreds of decisions on their own every day, and culture is our guide. Culture tells us what to do when the CEO isn't in the room, which is of course most of the time.

My favorite line is “Culture tells us what to do when the CEO isn't in the room.” I have been studying the ‘creation and nurturing” of organization culture for decades looking for practices and patterns among organizations with highly effective and sustainable cultures. Especially those that were not built on incentives such as stock options and those that were transnational.

It is easy to just look at those service intensive companies (Four Seasons, Starbucks, Zappos, Nordstrom and Southwest etc.) where there is close relationships between service and culture, but I am more interested in looking at culture and their relationships with strategy, structure, purpose and their implications on business performance and innovation effectiveness. Some of the questions I have been exploring include:

• The first question is does the CEO or the executive management knows what kind of culture they’re trying to build or what are the conditions required for those culture to flourish and key concepts to build from? Or it is simply unintended consequences of the CEO management style or something inherited from previous management? Do you know what you're building towards?
• The second question is can a company articulate its corporate culture in a way that is both tangible and explicit. A company publishes an annual report about its financies, should they publish a book about the company culture? A company’s prevailing values, mental models, assumptions, attitudes and beliefs all make up the soft, invisible stuff of culture that crate an environment of trust and balance. It determine its outlook—what it finds meaningful and important. Can you capture these stories and communicate them in a tangible way outside a Power Point? And what are the best practices to do this?
• The third question is when company is attempting a culture transformation; do they need a vision of what they want to become? Is there a genuine need to diagnose their present culture so that they can define the current state and the future state? And if the gap is too big, how do they know if the transformation is too drastic and simply not achievable?
• The fourth question is when organization culture gives people a sense of self and identity and determines, rituals, beliefs, style, meanings, values, norms and language, the way in which ‘things are done that way around here’, who should own it or is it possible for any function to own?
• The fifth question is around maintainence. An empowering executive management team can better assess the current status of an organization with an eye to shaping /modifying / eliminating the parts that are dysfunctional or ineffectivel, then replacing them with qualities that will improve the speed of decision making, productivity, and employee engagement. Corporate culture needs a maintainence plan. Do you have one?

Organization culture is not a vision, mission or management system. It is the strategy that guides how a company makes decisions disregard of what industry they compete in or where they play along the value chain and how decisions are made when the CEO is not around. And in particular today’s fast pace turbulent business conditions, a strong corporate culture can provide the strategic agility and empowerment needed to reduce the recovery time from any unavoidable setbacks or disruption.

Organizaion culture is the glue that holds a company today, even when lacking a robust business strategy. Far too many CEOs and executive leadership fail to make the connection between a “hard” strategy and a “soft” strategy and not putting enough effort to make creating, building, and nurturing a winning corporate culture the heart of the company strategy.

“To be an enduring, great company, you have to build a mechanism for preventing or solving problems that will long outlast any one individual leader.”           

                                                                - Howard Schultz

"We needed to integrate as a team inside the company so that we could integrate for the customers on their premises.” 

                                                                - Louis V. Gerstner, Jr.

The Hardest Part Of Any Innovation Process Is Sensemaking. And Sensemaking Is Closely Linked To Insights.

The hardest part of any innovation process is where data and insights come together and trying to make sesen of them. Sensemaking is about using visual mappings and narrative techniques to mine the non-quantitative data. This except is taken from a piece in the current issue of M/I/S/C magazine on Insights and Sensemaking co-written by me and Richard Thomas.

Customer inishgts can be inspiring but insights are only useful when they prompt action and self-reflection. Ideally, the best insights inspire even more insights and them more insights, but vast amounts of insights or the lack of context gives way to a different difficulty – the loss of both inherit and intended meaning leaves insights appearing senseless. For this reason sensemaking and insights are closely related. These pictures are from our M/I/S/C Insight Issue launc party. This is a thick issue and flying off the selves fast.

Sensemaking helps to illustrate unthought-of rules-of-order and insights are the direct experience of these perceived rules. Often they are under pressure and cue toward the yet-to-be but insights, by nature, are descriptive and reflective – retrospective of lived experiences. Insights are the past. They have been separated from life. To exist as unpredictable patterns they may or may not fully characterize the ‘real world’ or persist as perceived. The list of problems and challenges organizations face in managing and applying relevant consumer insights continue to grow. Here are a few:

Insight Speed & Complexity: Organizations believe they are working from a complex abundance of insights at an increasing rate – that they are diverse, independent and conflicting – but at times their insights are not insights at all. The pressure to categorize, prioritize and validate dominates the conversation as opposed to getting at the heart of the matter. How does ‘what is going on,’ effect what you desire to be?

Old Insights: Organizations often work form the same cues, and the same insights from the same reports. Managers facing time restraints carry over insights from project to project and create a self-reinforcing false reality and homogenous actionable intelligence at the organizational level, and a lameness that is visible from the shelf.

Biased Insights: Often projects, products and categories come equipped with bias toward the past and dominant insights that reinforce the known and the safe. They are often out of context, separated from their original time, expired but treated anew.

Insight Translation and Application: Drawing value from out of scope, irrelevant or intangible ‘inactionable’ insights is resource heavy. If they do not fit with the current mental model of the market or consumer, and they are cast aside.

Navigating Misinformation: Mistaking repetition and self-similarity as truth or validation. Aging Insights have resulted in a loss of their meaning – and relevancy over time.

Insight Disbelief and Disregard: The insights and processes are becoming contradictory, trust and belief is bleeding out. The inaccuracy of the processes in the real world occupies our emotional intelligence when it should be ‘feeling opportunity’ – sensing valuable cues for action. People want insights to be singular in their validity but as a reflection of the real world, insights could and should complicate and contradict each other to accurately describe reality and texture.

These problems are symptomatic of more than the solutions they seek. The imperative to describe and validate the past, present and future has engaged tension between hesitations and over eagerness about change, insecurity and confusion associated with ambiguity. These problems stem from an over objectification of ‘the insight’ where we wish to be accurate. Insights have become ‘processed’ from perspectives of existing evaluation techniques to control, predict and guide the outcomes of their application in order to ‘de-risk’.

Overly fetishized instrumentation, metrics and measures have become the source of confidence in decision-making. It is hard to put the "sense" back into our everday managerial settings increase the signal-to-noise ration.

Sensemaking is where we sense of complexity and masstive conflicting information is being sorted through and relationships are mapped out and the emerging themes and weak signals are identified and clarified. I have been training senior managers and executives of applied sensemaking in strategy, marketing, product development, operations and technology planning. It is the most important skill managers need to master today.

Strategic Innovation And The Quest To Reinvent Management.

I spoke at a number of conferences the last few weeks on the same topic of Strategic Innovation in the Age of Reinvention. Reinvention is the word as every individual, practicing professional, multi-nationals, non-profits, education institution and government ought to be thinking about “reinvention”. We desperately need to “totally reinvent ourselves” in order to transform our economy, organizations, politics and societies.

Corporations adopted strategies 20 years back to outsource their production and resulted in loss of ability to innovate and compete. Many corporations cannot even define their core and what they are really good it today, their perceived competitive advantage was merely channel assess and a warehouse of intellectual property and patent documents.

Business leaders and governments are also experiencing a profound crisis of trust and legitimacy and all these factors have triggered a loss of confidence in traditional ways of doing things. The new world of reinvented strategic management requires applied design thinking across all management functional disciplines.

Today the very core of many management theories are being questioned and “management” is close to a point of failure. Leaders are looking to find something new to grasp onto in order to make sense of what’s going on and are looking to organize for a future of unprecedented uncertainties. Companies that fail to make the transition and missing industry breakpoints will be forced to play catch-up or risk being irrelevant or extinction.

One of the problems is we are still training our managers (MBAs) based on theories developed in post-Wold War II which was adequate when there were very little competition and technology was not a key drivers of competitive advantage. The M-form organization design is functionally oriented and the idea is every manager should manage a piece of the business as if optimizing each function means optimizing the whole. They are specialists and as as a result everyone is sub-optimizing the whole. Resulting in turf battles, lack of collaboration and unhealthy internal competition that causes satisfactory underperformance.

The strategic process occurring when the organization already realizes that it is facing an immdiate crisis, usually leads to strategic plans in the way of drastic cost reducing changes - closing of plants, cutting down of manpower, cancellation of investment plans or a change in their direction. These actions can only help them temporary. These are no changes in the present cognitive frame of the organization and these efforts may only enhance the sliding of the organization toward its doom.

The new world of reinvented strategic management requires applied design thinking across all management functional disciplines. The very core of many management theories are being questioned and “management” is close to a point of failure. Leaders are looking to find something new to grasp onto in order to make sense of what’s going on and how to organize for a future of unprecedented uncertainties. Companies that fail to make the transition and missing industry breakpoints will be forced to play catch-up or risk being irrelevant or extinction.

Design Thinking Is A Cognitive And Intellectual Process That Balances The Rational And Emotional. Not Included With Your MBA.

What is Design Thinking? Because of the word “design” and many automatically associate it with the craft of design or design as a profession. Actually it is less to do with “design” and more with “system”. There are many ways to define "design thinking" and this list is not exhaustive:

• A way to instill customer-centricity and empathy
• A framework for exploration and experimentation
• An approach to sense-making and problem solving
• A methodology to foster exploration and experimentation
• A design buzzword to tell you a designer can do more than design
• A management buzzword sold as the “next” strategic tool
• A marketing slogan or tag line
• A self-gratifying term for those who think they are creative

The term “design thinkers” implies that designers are craftsmen and not thinkers, which is NOT always the case. It is also a stretch for traditional industrial or brand/graphic design firms to claim to be able to use "design thinking" to solve complex strategic issues. These firms need to go through a radical transformation and close a big capability gap before they can even attempt to implement it for others.

Today, "design thinking" is frequently compared and contrasted to business. This is often an over simplification that forces us into predetermined roles along with their associated rules, conventions, behaviors and formal expectations. It Is important to recognize that "design thinking" is NOT exclusive to designers or unattainable to those in another discipline. Design thinking is natural and inherent in all of us who are smart and creative.

"Design thinking" is a cognitive and intellectual process that balances the rational and emotional – in effect combining left brain and right brain thinking. When applied, it harmonizes with other modes of thinking and closes knowledge and information gaps, creating order and refining meaning. Because "design thinking" is a dynamic, constructive process that is iterative in nature, developing ideas requires ongoing definition, redefinition, representation and assessment.

To achieve those tangible outcomes, you need to open the process to multiple participants and socialize the process and outcomes, visualization is a very critical part of the process, not an outcome. Even the Department of Defence recognizes the needs to train "design thinkers" that are capable of critical and creative thinking to plan operations in dynamic environments with fast-changing uncertainties in extremely complex conditions.

People who are capable of using "design thinking" to identify and develop different military response options within the context of a big strategy are crucial to successful military operations. The development of such skills requires a shift in their focus from the operational and tactical environments to the strategic environment. This is an extremely challenging undertaking given that many military officers spend the majority of their career starting at lower levels and their advancement depends upon how well they perform tactically. This is very much like managers in large organizations who were promoted based on their ability to execute tactically.

To develop senior commanding officers with "design thinking" capabilities require DOF to train them new skills including analysis as well as synthesis. "Design thinkers" possess the ability to think critically on a "system" level; break concepts into simpler parts and mapping out their relationship and system impact before rearranging the elements into a new whole; in other words, to produce something through imaginative skills and quick experiments. And yes, imagination is always needed.

You Think Innovation Is Hard. Business Transformation Is A Hundred Times More Difficult. And In Fact It Is The Number One Barrier For Strategic Innovation.

People think innovation is almost just about new ideas. Funny how many think Blue Ocean Strategy is a big wake-up call when all it does is communicating the very the basic and simple idea of strategic innovation – how not to compete with your competitors in the same game and instead create a new game.

A strategist has the choice between getting back into the fight with existing competitors or creating a new space when there is no competition AND no proven customer demand. This is the hardest part - "no proven customer demand" and let's see what the board has to say when you tell them that your strategy cannot be validated quantitatively. New game strategy is extremely difficult to make happen for a number of reasons:

• It is hard to convince the board to bet on a market that has yet to exist
• Successful founders CEOs are stuck seeing things with an old mental and underestimaing the threats
• It is hard to change the minds of people who wanted (and have vested interest in) the old business to work and not willing to give up
• It is hard to make the switch as it requires new mindset, capabilities and organization design
• It is hard to be credible using the the current brand entering or creating the new market space
• There is the question of how sustainable the new value logic from a customer and market perspective

Looking back at the history of industrial revolution or our information or technology revolution, red oceans vs. blue oceans or a better way to describe it is “today cash flow" vs. "future cash flow" or "defender vs. "attacker" etc. Avoiding competitions in the red oceans give rise to innovation opportunities that create new market space and could triggers a new round of industrial transformation. The author did not address the dynamics of the industry transformation.

Straegy is never that simple as red and blue oceans, organizations are increasingly inter-connected as they leverage brand, patent, talent, technology, knowledge, channels, products and services from each other often located in disparate parts of the world. These complicated inter-connections often prevent companies to reinvent themselves even the opportunity is obvious.

There are many hurdles and barriers for transformation including cognitive, resource, capabilities, motivation and political ones that prevent making a new game strategy implementable. Idea Couture Brand-driven Strategic Transformation goes beyond creating, communicating and maintaining a sense of identity and belonging for the employees, we bring foresights into the process and connect the align the brand with the business strategy and the strategic futures.

The brand is used like a savings account for emotional equity while we develop an engaging and energizing feeling of commitment to the organization by creating and co-creating a shared destiny; this is where it creates the highest impact. Conventional visioning and mission writing exercises often fall short to drive transformation. The idea is to get executives and senior managers in front line employees to move beyond empty, slogan-driven communications, which are more likely to lead to detached cynicism than to engagement, and to help them develop a clear personal commitment to an organizational purpose that will reflect in all aspect of managerial actions.

Business transformation is the execution of an integrated, corporate-wide program aimed at aligning the present and future as well as the organization, strategy and brand, it ensures alignment and internal consistency by reshaping the leadership, strategy, finances, organization and operations of businesses as a whole. It is not a Power Point, it is the energy flow of an oranization.

There Is An Inherent Conflict Between Logic, Emotion And Creativity. So How Should We Deal With It?

When peope ask the quesion "Do you know the correct answer?" I don't like that question at all. It is not a smart question as a start. The biggest problem with our formal education systems is our over-emphasis on finding the correct answer to a particular problem. While the quest for correct answers helps us to function at work, it also impedes us when it comes to making the bigger, more important decisions, largely because many bigger, real-life business issues are ambiguous, complex and dynamic. If you have been around for over 50 years and have travelled to more than 20 countries and speak a few languages and have a few degrees under your belt, you probably know there is no right answer, may be a lot of wrong answers.

Creativity is not a license to be wrong (you have been reading too much Fast Company), strategy is not a license to be boring or lack of imagination (Reading too much HBR). A PhD degree is not a license to overintellectualize and being irrelevant to the real world and use words that you need to explain what you mean. And an MBA is not an automatic license to make key business decision, you need to earn it.

However an MBA does teach you a few important concepts if only if you understand how to apply them. You should know how to re-org your in-laws into a 'team-based family.' You learn to refer having babies as pilot market testing. You should understand the cost structure and sytem implications of starting a family. You know the cost of capital when your spouse decided to purchase a Hermes Birkin. And most of all, you know how to talk about your past relationships as ‘sunk costs.’

I definitely school needs to teach more creativity. Not the crazy useless exercises but applied creativity and design thinking in everyday life from science to economics. Today (and I should say it has always been) creative thinking is critical to business strategy and innovation; however, If you look at the top 20 MBA programs around the world, you will be challenged to find any courses, core or elective, which teach, train or even inspire students to be truly creative. Instead, most MBA programs and courses focus on numbers, analysis and the logic of deductive reasoning.

There is an inherent conflict between this kind of logic and creativity, and in most business settings, logic is usually quick to get in the way of creativity. Creative ideas can run into the walls of business logic because 1/ it does not quickly, clearly or at all connect to 2/ business strategists often operate within the boundaries of defined roles, and decisions are made based on those boundaries – they draw on what they know and what they have learned including formulaic behaviors, processes and the “best practices” that have evolved through mass consensus – to shape how they think and act.

That explains how many MBA students had Adam Smith on their reading list. The 18th Century idea that people – given their limited time, information, resources and budgets – act purposefully to maximize their own satisfaction is epistemologically central to business thinking. In Smith’s view, all human behavior is rationally self-interested and we are innately selfish. Thanks to this model convinces many how “easy” it is to predict individual or organizational behavior. It is not quite that simple.

When it comes to human behavior, this is where many economic principles, particularly Smith’s, break down. I am not rational (ask those people who work wiht me) and many of us are not. The economist's notion that people act rationally only implies that they try to act in ways that are consistent with their own personal objectives, even if those objectives seem absurd to outsiders. That's the beauty of being human. Read more about creativity in this coming issue of M/I/S/C - The Creativity Issue.

Why Traditional Apporach To Business Transformation Don't Work Anymore?

Over 60% of companies out there are operating on a dated buisness model and 20% operating with a mental model that had expired for more than 5 years. There are little reasons for those 20% of companies to survie another 5 years or even 3 and for the other 60% they have a short window of opportunity to design and orchestrate their transformation.

Rapid changes in external environment, consumer behavior, global economics and disruptive technologies are throwing off the most rigor business strategies and the best trained managers. Although everyone expect to see big changes ahead but people reacts differently to change.

Many people become accustomed to the status quo and don't want to alter the way things are being done -- regardless of the potential benefits or the disruptive threats from emerging competition. For many, fear of the unknowns and the concerned about the ramifications on their careers are barriers to acknowlege the need for change. People don't like change. And winning belongs to those who thrive with change.

Success for operating in a neck-breaking speed and unknown environment often comes from the ability to drive the proper (or mulitple) transformation at different critical points -- for industry breakpoints. “Business as usual” simply means "end of a business or an industry." Being able to reimainge and reinvent offerings and models are critical to addressing economic volatility and staying on top of the market.

Business transformation traditionally takes the form of unfreezing to refreezing and briding the gaps in capabilities, mindset and performance. And these changes which can take the form of business strategy, management style, culture, organization design and business processes.  One most popular model is the classic model proposed by Lewin which argues that the process of change involves three stages 1/ unfreezing, 2/ change and 3/ refreezing. This model was valuable in recognizing the importance of not only new learning, but also “unlearning” old attitudes, habits and behavior patterns. Today many question the practicality of this model suggesting that a “refreeze” implies a resistance to future change and partucular the future is uncertain.

The Idea Couture Brand-Driven Transformation Model has a strong future oritentation and focused on bringing strategic foresights and organization insights to reimage futures. It uses a lot of Design Thinking principles and makes the process very tangible and collaborative. It is a process of organzation co-creation which people put their stake on what shared destinies they wanted to particiapte in creating and thus releasing energy in the process. It will take 80 Power Point slides to illustrate the process, a high-level view of this model is captured by the following formula: Successful Brand-Driven Business Transformation = P+N+C+M+I+F

• P = Develop a perspective of the future(s) informed by strategic foresights (both customer and technology contexts) and deep organizational insights;
• N = Develop a co-created brand narrative that inspired people of possibilities and put purpsoe at the core of the story;
• C = Develop a compelling case for the need for change developed and shared by all executives, investors, employees and B2B business partners;
• M = Develop a practical means to tie innovation (roadmap) and projects to the desired future(s);
• I = Design an incentive systems that are aligned to identify and encourage appropriate behaviors compatible with the desired future;
• F = Develop feedback mechanism for each stage of the process to monitor progress and provide input for continuous improvement.

Any Business Transformation process is painful. The way many organisations manage change or transformation using existing model is facing the challenge of speed. They are too slow and by the time they refreeze, the market has shifted and they need another transformation. The other important issue is key decisions are made in isolation and the change piece comes later which I argue often is too late. The future of Business Transformation is a co-created one.

On Building The Creative Culture And Learning How To "Forget" Creatively.

We had our Idea Couture Christmas staff part last week. Looking back there were a lot being accomplished and a lot more to do. What started as a little experiment bringing multi-disciplinary design thinkers together and now becoming a key driving force and intellectual engine advancing the practice of design thinking in innovation and business applications. Idea Couture is where multidisciplinary thinkers come together with shared purpose and where creativity flourishes. I am looking forward to have our London and Mexico City offices running in 3-6 months. I feel I have the right people in place and that's a great start.

At Idea Couture, creativity means more than just novelty ideas. It means new ways to frame problem, using new lenses and developing new perspectives. I am so happy when I see happy people in the company doing great things. I am happy to see people growing and that's gives me tremendous satisfaction.

At the end of the day, we're in the business of producing the non-conforming super smart and creative thinkers and doers. I am pushing the envelope everyday and so far no one is complaining. Heartiest thanks to my management team who did a great job of putting togther the first Idea Couture Award.  You guys rock!

On the road this week and spending time with people hearing them talk about their innovation challenges and how they apply design thinking. Lots of great meetings. We're aware of the big changes coming ahead. Every business, government and instirutions will be impacted. Change does not creep up on us every 10 or 20 years, it is an ever-present business and organization phenomenon that is disrupting industries and causing firms and industries to disappear. Although the degree and velocity of change is unprecedented.

Everyday we’re dealing with more and more unknown and unknowable, but decisions still need to be made. Many of the challenges today are unique and have few or no precedents, so textbook solutions (and no guru don’t waste time buying whatever best sellers) or trying to find aHarvard Business School case study. Past solutions do not necessarily apply today. The external environment is constantly absorbing shocks from technological advancement, cultural change and systems failure.

Creativity is needed everywhere to rethink and reimagine products, experiences, companies, processes and even industries. Top executives are looking everywhere for new thinking and solutions that are outside the routine of orthodox strategies and old paradigms. So where can you look for new ideas? And how can you design an environment in which creative people can survive, thrive and flourish? We can begin by asking, how can you make people creatively forget what they know in order to reinvent the future? This is where sensemaking comes into play.

A big part of sensemaking is creative “forgetting” and it is first thing you must do. We all create our own environments and then constrained by them. Being able to aware and realize the impact of our own behavior in creating the environment in which we’re in is a very important first step. Forget who we are is something worth practicing. There may not be any scientific evidence to suggest that those who know what to forget can think more creatively about the future, but in the formulation of business strategy, creativity can be seriously constrained if it is burdened by the past. The problem lies in the notion of “core competencies,” which suggest that companies should stick to what they know best. If that’s the case, then why many of those once great companies should still be around.

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.

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.

Does Management Needs Creativity? Is It A Gift Of God Or Product Of Preparation, Practice And Training?

This has been a very crazy week between meetings, conference calls with London, Mexico City, Shanghai, Seoul and Paris, magazine deadline and cover shoot, staff party, a number of other social events, and London Business School's worldwide alumni celebration took place last Thur in over 80 cities, and it was great to catch up with many familiar faces.

The next issue of M/I/S/C is the big "Creativity" issue - the magazine is doing so well and it is putting some pressure to keep up the quality. I started them magazine in a few weeks and operate it on a "zero planning" basis - meaning I do not have an editorial calendar, or editorial meetings and everything is sponstaneous. Scary thought for some. I was wondering what should I do about the cover last Monday. Decided to use a dancer instead of a model for the cover on Tuesday. Picked up the phone and called a dance school the same day and talked to Karen Duplise of Ryerson Theatre School (Performance Dance Degree Program) and went in for a quick casting the next day. Studio booked and shooting session scheduled on Thurs. Friday was for picture selection. I am pretty happy with it. You have to wait 10 weeks to see the next cover. Here's a peek.

Dance is like design, the question is always about how much art (the craft) and how much creativity. Celebrity choreographer Twyla Tharp choreographed Push Comes To Shove (1976) which featured Mikhail Baryshnikov and is now thought to be the best example of the crossover ballet. The crossover was a perfect example of creativity in a highly disciplined art. 

Tharp has written a book about creativity - The Creative Habit: Learn It and Use It for Life.  In the book she shared what she has learned about creativity and how those lessons apply to anyone with creative impulses. She believes that creativity is not a gift from the gods, but rather the product of preparation and effort. Some truth here but not sure I torally agreed with that.

 

Like to share a reprint of my interview with London Business School Alum News on new thinking that is crucial to innovation, first apprared in LBS Alumni News and then LBS IMPACT.

What do you see as your impact on the world? My LBS degree was my second graduate business degree. I was able to have the luxury to put more focus on the quality of the learning in one specific subject area rather than multiple foundation components. I was excited about learning from inspiring teachers such as Sumantra Ghoshal, Tom Stopford, Jules Goddard and many others. They inspired me to think about deep management and leadership and helped me to realise the difference between good managerial practices influenced by bad management theories and good management theories applied through bad managerial practices.

Business and government leaders are experiencing a profound crisis of trust and even legitimacy and that has triggered a loss of confidence in traditional ways of ‘managing’. The very core of many management theories is being questioned and ‘management’ is close to, if not passed, the point of failure. My mission is to help Fortune 500 companies make sense of what’s going on and to rethink, re-imagine and reorganise for a future of unprecedented uncertainties and opportunities through applied design thinking. I operate at the intersection of design thinking, competitive strategy and organisational change.

What indelible mark do you want to leave on the world? As a side project, I publish a design thinking and innovation magazine called M/I/S/C/ (Movement/Intuition/Structure/Complexity), the idea came to me when I was in Milan trying to decide what magazine I wanted to read on the plane. I really wanted one about innovation and change but the ones on the shelf were not hitting the mark. So I decided to start one. It is doing amazingly well selling in over 22 countries. Now we’re doing a Spanish edition as well as an iPad edition. I hope it can take on a life of its own and leave a mark by inspiring future managers and business thinkers.

What is the greatest lesson you’ve learnt? I learnt that it is very important to embrace failure. I should have failed more and more often when I was younger. But unfortunately people did not encourage ‘embracing Failure’. I didn’t take many risks and I played it very safe with every project I started. I did everything I could to make it work because failure was seen something that holds you back. I know now that you learn more when you fail often. Trying to avoid failure only prevents growth but once you alleviate that fear many more opportunities present themselves to you. Slowly, ‘failure’ is starting to gain acceptance and it will make future professionals much stronger and wiser.

What was your biggest mistake? Not listening to my intuition. It’s difficult to trust yourself when everyone and everything around you is telling you something different. Trusting your gut is one of the most important things you can learn. Also, not leveraging the opportunities that come with any crisis. Every situation presents obstacles but also opportunities – you just have to look for them.

What is the next step for you? I’m very excited about helping companies power into the future through design thinking. It is the reason I go to work (or the airport) every morning. Our company started as an experiment and is now fast becoming the most talked about innovation firm. The next step is to secure a global presence and build the next generation of leaders that will propel our growth. The future is exciting.

Design Thinking And Growth: What’s The Connection? Why Do We Need Growth?

The Harvard Design Thinking Semina was a great one. High quality particiapants and great turn out with beatiful New York City spring weather. Lunch on the rooftop is way better than a banquet room or a faculty's dining hall. No place on earth can beat the view of New York City. So much energy and creativity. Many participants came all the way from China, Argentina, Mexico and Korea. Thinking of the nex one outisde US, perhaps somewhere Europe and Asia?

Growth is a funny word and often misunderstood just like other words such as strategy or innovation. I have heard from people from 25 year old young smart people to 45 year old seasoned executives and often they struggle with the idea of growth. Why we need to relentlessly achieve growth and what growth means?

Growth is often perceived as a proactive (not defensive) strategy, as the Red Queen says in Lewis Carroll’s Through the Looking Glass, “Here it takes all the running you can do to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!” We're at a point that you can't run faster anymore and is close to the physical limit of how fast we can run. Both organizations and even economies. We ned to develop out talent pool to match the economy of the future and harness the full capabilities of the our human capital and technological progress and to reverse the damage we've done to the environment. Now it's time to reinvent the wheels.

Growth is perhaps the most important word on CEOs’ minds, small companies or large enterprises. Small firms want to get big and big firms want to get bigger.  Scale brings resources, market power, improving employees’ standard of living and it gives you currency to acquire.  Today, quality growth is hard to come by, and responsible growth is more difficult. Every company needs a grow strategy or you are waiting to die to be acquired or planning to exit. It is like swimming up stream a river, there is nothing call stay put. Either you swim to go upstream or washed down the river.

Philip Crosby, author of  The Eternally Successful Organization says that growth is unavoidable, "if for no other reason than to accommodate the increased expenses that develop over the years. Inflation also raises the cost of everything, and retaliatory price increases are not always possible. Salaries rise as employees gain seniority. The costs of benefits rises because of their very structure, and it is difficult to take any back. Therefore cost eliminations and profit improvement must be conducted on a continuing basis, and the revenues of the organization must continue to increase in order to broaden the base."  When a person ask you why do we need to grow? Ask him or her whether he or she is preparing not to have any promotion, personal development and increase in income and responsibility for the next 10 years.   If a company stop growing, there won’t be opportunities for everyone. Period.

The challenges are 1/ How to grow responsibility? 2/ How to grow purposefully? 3/ How to ensure your growth is sustainable? That’s where design thinking comes into play.  Design thinking can help create a compelling story of the future, anchored on the needs of customers (and societies) and bring a future orientation on strategy development and an empathetic manner to how company think about its customers. Through storytelling, we can unveil the aspirations and natural inclinations of an organization and we can get a sense of what feels right. The story of a company is what can truly determine its value, and the right story will always be more substantial than the right strategy. This is primarily because strategies are susceptible to the ingenuity of competitors, disruptive industry shifts and bad luck, while stories are impervious.  

Spreadsheets and power points don’t tell story. The Design Thinking approach believes that stories are fantastically useful in their ability to bring people onto the same page (unify attention), organize information and present it in an efficient and easy to access manner. Stories help organizational stakeholders access and understand the logic, reasons, motives and intent that surround a potential vision or context for growth. Stories can help reveal the choices presented to an organization, its possible behaviors, courses of action and their potential outcomes. Perhaps most importantly though, stories significantly improve cognition and comprehension. A well-crafted story or narrative can help make contexts and strategies for growth more accessible so they can be questioned, debated, shared and recounted.  

So what’s your growth story? Not only your company needs one. Amercia needs one. And every country needs one too. Design Thinking can help goverments and cities to rethink growth and development which mostly comes from productivity growth, which reflects multiple factors — but the biggest factor is technology.Yes tehcnology is the key driver of grwoth.

Indeed, the dominant role of technological development in economic growth has been well-documented ever since Nobel Laureate Robert Solow published his seminal paper in 1956, “The Economic Record,” which demonstrated that technological progress drove at least 80% of economic growth in the United States between 1909 to 1949. That's why I have faith in the US economy because the US is still the most technologically advanced country in the world. At least for now.

Design Thinking Can Help Organizations Making The Quantum Leap In Strategic Innovation.

Lately I have been meeting with dozens of potential candidates who are seriously interested and passionate about design thinking and understand the role it plays in transforming organizations, design thinking can help companies to make the next quantum jump in organization, human and social evolution? It is a new managerial logic as well as competitive logic and in then years every business school will have this in their core curriculum. The problem is there are far more people interested in it and not many understand the ‘what’ and ‘how’. I am getting an average of 10 resumes a week and most people think design thinking is super cool.

The relationship between design thinking, system thinking and strategic innovation are pretty muddy and many conversersation and writing are mostly around the simple notions of observational research, prototyping and design. We’ve beaten that one to death long time ago and many of these conversations are missing the point.

I don’t think design thinking has come to a point when it is over hyped nor it has come to a point where people truly understand what it means and how to apply it. There is a design perspective, an engineer perspective and a business perspective to it. The challenge for many is the ‘how’, Idea Couture is the only company that has taken this to a practical level for business applications, and beyond telling people you need to be creative. Here is good piece on design thinking from Will Novosedlik's blog.

So far there are no empirical studies that look at a directed implementation of design thinking in business with the aim of improving strategic competitiveness, innovation capability and business performance. We don’t usually ask for a business case of HR, legal, compliances, risk management or strategy department, why are we asking for design thinking investment business case? Another reason for lack of concrete evidence is that is it is hard (and wrong) to compartmentalize design thinking into the format of a method, process or tool. Rather the approach should resemble an emergent learning journey where rapid experimentation, broadening of new perspectives and challenging of dogmas needs to be at the fore.

Design thinking is an emerging discipline and our work to date is a work-in-progress. It is not about getting brilliant ideas from the minds of geniuses or creative superstars. We don’t want creative superstars; we want people who understand cross-disciplinary and interdisciplinary collaboration and the importance of rigor, play, balance and discipline to create elegant objects, solutions and systems.

I have a great respect for Tim Brown who introduced the word design thinking although we have a very different definition and approach to it. He is a designer at heart and I am a strategist. Our jobs are similar which is to help identify patterns where others see complexity and confusion; we synthesize ideas from seemingly disparate fragments; and uncover solutions new opportunities. Design thinking is a method in which genius is not needed, just ordinary people with a lot of commonsense and empathy.

It has been a very productive week in Vienna talking to many interesting people including the organizer of Vienna Design Week and I am thinking about dong a special feature for our next issue. Vienna is an interesting city where it has a history of music and engineering, the two very different or similar domains depend how you look at it.

In addition to music, Austria has made a name for itself with the electronic engineering of customized electronics like microprocessors and integrated circuits for airbags, ABS braking systems and components for airplanes and high-speed trains etc.

I was staying at the top floor of Das Triest, loving it. The hotel is in the fourth district, which is set back about ten minutes straight walk from the city centre. An old hotel that was transformed into a luxurious, warm and unique contemporary design hotel by Sir Terence Conran, it was the first design hotel in Austria. The building was originally used as a stable for horses pulling stagecoaches between Vienna and Trieste - hence its name, "City of Trieste." The hotel design provides a sharp contrast to the city 19th-century Art Nouveau architecture. It has a lovely courtyard garden, which reflects Sir Terence Conran design philosophy and give a sense of Viennese flair with a little English touch. Perfect for Viennese summer party.

I literally had most of my meetings in the courtyard. It is very popular event venue for the entertainment business. I am thinking of hosting our next client's event there. Client innovation workshops with sacher tort for coffee time to be followed by a Mozart concert. I think that’s a really good idea.

Design Thinking Has Inspired Multi-disciplinary, Interdisciplinary and Trans-disciplinary Approaches To Problem Solving. This Is Just The Beginning Of A New Discipline.

Prague is mystical with a mix of medieval, Renaissance, and Art Nouveau architecture and the design scene is slowly taking shape. You still see traces of history of what communism had done to the city even after these buildings are completely restored. It is where Renaissance meets neo-Gothic and the baroque structures from the 18th centuries.

You can see shadow of cubist touches, which thrived in Bohemia more so in the neighborhood near Vysehrad Park. The public housing or “rabbit huts” as they called it, cheap but highly functional (the Walmart of architecture), provides a stark contrast to the Bohemia style. It is the featureless nature but with modern plumbing and heating were once considered the politically correct way to live. Or at that time, politically sustainable living as I would have called it.

I stayed at the Hotel Josef, a nine-year-old modern boutique hotel that was one of the first in Prague and still the most popular one. It is centrally located in the old Jewish quarter and right next to the Parizka Street. I don’t like the word boutique hotel, as it doesn’t mean much other than small and not part of a big chain. I rather use the word design hotel.

I was really impressed with the design and how it holds up over the years – now that’s design at its finest. There was not a thing to make you feel that it is getting out of fashion, in fact, the hotel design concept is to provide guests with a break from the fascinating baroque architectural surrounding the hotel and give them space to step back and relax in a soothing, and luminous environment. I enjoyed the hours and hours I spent sitting in the lobby lounge doing work with my Macbook while occasionally looking out the windows.

When you’re in Prague, you can’t avoid talking architecture. I’m not trained as an architect but always fascinated about the design process as well as the visual artifacts architect employs. Architects are considered designers and probably fair to say that they required the most rigor training both in art and art history compare to other design discipline such as graphic, fashion or industrial. They probably attracted a very different type of design mind than those of other design disciplines. I wonder what would happen if first year MBA students were required to spend 3 to 6 months studying the history of architecture and design, at the same time learning some basic drawing skills. I think that would drastically widen their perspectives as well as picking up some drawing skills that they can use for life.

Today, most MBAs can’t even draw simple diagrams. The pre-MBA studies are mainly statistics and accounting. There is plenty of time for accounting later in the program. The abilities to communicate using simple diagrams are extremely useful for business problem solving, strategic communications and visual sensemaking (strategic modeling and business model design). Architects use diagrams to explain their visions, elements and relationships between them. Business people can use abstract visuals to show business model options, new value chain design or customer interactions. Once business persons/design thinkers are supplied with visuals to making connections, they can see the relationships between different components better and in return easier to see something otherwise too complicated to express.

Visual sensemaking is quietly changing decision theory, it is also influencing design thinking and theories of design-oriented problem solving as a manifestation of pattern recognition. It is hard to say whether sensemaking is influencing design thinking or system thinking is influencing design thinking and in turn influencing sensemaking. It is a fact that design thinking has inspired multidisciplinary, interdisciplinary and trans-disciplinary approaches to problem solving. I will explore the application of this in my coming Design Thinking for Creativity and Business Innovation seminar organized by the Harvard Graduate School of Design in NYC this month. 25% discount for early registrations and affiliates of a list of design and business schools. Now hoping on a train to Wien.