innovation playground Idris Mootee

Service Strategy - What Is The New Gold Standard? Michelli Has Some Of The Answers. Lessons From Ritz-Carlton.

I don’t remember when the word “service economy” first showing up five or ten years back. What is “service economy”? In economic terms, services are a diverse group of economic activities that include high technology, knowledge-intensive sub-sectors, as well as labor-intensive, low skill areas. In many ways, the service sectors exhibit marked differences from products (manufacturing), these distinctions are blurring.

Technology is shaping the economics of service.  It is also affecting the relationship between product producers and consumers in areas previously unthinkable from fast moving consumer goods to health care, where the need for personal contact to diagnose and treat ailments is becoming less essential.  One distinguishing feature of services is the relatively high emphasis placed on intellectual capital, or “intangibles”, in many service activities.  These “intangibles” are not often captured in financial market valuations although that is changing slowly. 

Service is particularly important in the top end of the hospitality industry and the luxury good sector. I have widely spoken on topic of luxury goods marketing in Spain, London and Italy over the last few years, but my focus was on the brand and retail experience design, not on the service side.  There’s always the question of what does luxury really mean? I’ve been tackling this quandary for many years as part of our work on the ultra-luxury brands.

I have identified the following recurring themes in delivery of ultra luxury brands: firstly, at a minimum, for consumers to feel the unsatisfiable desire; secondly, for them to enjoy a standard or experience that is beyond ‘their expectations or imagination’; and thirdly, to feel individual, very special and your product and services need to enhance their individuality. And contrary to popular belief, exclusivity is not the primary determinant of a luxury brand although it is the case in emerging markets. Exclusivity, in and of itself, does not increase the desirability of luxury goods with today’s democratically minded luxury shopper. Luxury has new manifestations particularly in consumer electronics and technology sector. Today luxury brand need to have certain performance too. Nice packaging and fancy ads won't cut it.

Back to the topic of service, my friend Joseph A Mitchelli is an authority in customer service and organizational consultant. I just received a copy of his latest book ‘The New Gold Standard: 5 Leadership Principles for Creating a Legendary Customer Experience’. It is a follow up to his bestseller on Starbucks. The new book focuses on how Ritz-Carlton has elevated the luxury experience to an art form. The book contains a lot of field-tested advice from both senior and front-line managers at Ritz-Carlton.  Here’s a except from one of my favorite chapters ‘Attention is a Multisensory Activity’:

• Staff must empathize with the guest’s emotional perspective by utilizing all of their senses
• Staff must be encourage to put themselves in the situation of others
• Staff must look for opportunities to serve others, even when you are not in direct interaction with those needing service
• Anticipating guests’ needs is a simple, almost artistic skill-one in which you listen and observe the guests’ habits

Here are some good questions from the book to take home:

• In what ways have you designed service delivery that appeals to both the thinking and feeling aspect of the consumer?
• How does staff gain an awareness of the opportunities they have to wow or make emotional connections with customers at every touch point of the customer interaction?
• What processes and technologies do you employ to maximize cross-departmental service?

BullShits Are Like Cholesterol: Do You Know What's Bad and What's Good?

Design thinking and applied creativity is a mystique for many. We often come across a lot of bullshits because many simply want to push their own ideas and desperate to throw in all kinds of irrelevant thoughts and associations. Or sometimes designers use language that others do not understand and so labeled them as bullshits. Is it easy to tell when a design discussions becoming just bullshits or they are genuine design dialogue? Not all designers can communicate and sometime those who can articulate design cannot design. This is a post for another day.

Harry Frankfurt, a Professor of Philosophy at Princeton wrote in his book one of the most salient features of our culture is that there is so much bullshit. We watch, listen to and read all kinds of bullshits everyday. There is no question some of us contribute our share. Many (like me) are very confident of our ability to recognize bullshit and to avoid being taken in by it. Frankfurt, a popular moral philosopher, attempts to build such a theory. With his characteristic combination of philosophical acuity, psychological insight, and humor, Frankfurt explores how bullshit and the related concept of humbug are distinct from lying. The book is worth reading. He argues that bullshitters misrepresent themselves to their audience not as liars do, that is, by deliberately making false claims about what is true. In fact, bullshit need not be untrue at all. Bullshitters seek to convey a certain impression of themselves without being concerned about whether anything at all is true. They quietly change the rules governing their end of the conversation so that claims about truth and falsity are irrelevant.

Frankfurt concludes that although bullshit can take many innocent forms, excessive indulgence in it can eventually undermine the practitioner's capacity to tell the truth in a way that lying does not. Liars at least acknowledge that it matters what is true. By virtue of this, Frankfurt writes, bullshit is a greater enemy of the truth than lies are. Bullshiters don’t know whether they are right or wrong. Essentially any pitch has some bullshit elements in there, or the process is an exercise of bullshits. In design, the pursuit often include some functional design objectives, answer to user needs or aiming at a number of user personas. The emotive elements are usually harder to describe. It comes from a deep belief and intuition that simply cannot be right or wrong. Is this bullshit?

Le Corbusier (Charles-Édouard Jeanneret-Gris, who preferred to be known as Le Corbusier 1887 -1965), was a Swiss-born architect, designer, urbanist, writer and also painter, who is famous for his contributions to what now is called Modern architecture. Early in his career, he was influenced by the problems he saw in the industrial city. He thought that industrial buildings and housing techniques led to crowding, dirtiness, and a lack of a moral landscape. It is certainly true today, but when he was advocating the ideas he wasn’t certain. He was simply an advocate of his ideas. Would that make him a bullshitter? Later he transformed his ideas to physical form, as houses which he created as “a machine for living in”. (I am a big fan of his work and I have half-a-dozen of his original pieces at home)

Bullshit is in fact part of the design process, we should not see in a negative fashion. It is simply a process to rationalize ideas and concepts or the unrationalizable. Sometimes these rationale are anchored upon observational insight which again has not quantitative grounding, but that doesn’t mean they are not scientific. It is rather hard to describe the inquiry as it a very personal journey for a designer to immerse oneself to look for signals, particularly those signals that are hard to pick up. So it is fair to say that every great inventor/innovator/designer/architect needs to be a bullshitter.

Sometimes I use the world “bullshit” within two completely different contexts. When we can say we need to put more thoughts around an idea and build a story around an innoavtive concept, we say “add some bullshit around it”, but we are not demeaning the process or intend to misrepresent the idea at all. Quite the contrary, we mean we need to put more thoughts on the rationale.  We do understand the need to articulate the rationale on any innovative ideas. Sometimes we back up with some hard facts.

And sometimes I say “that stuff is full of bullshit” and that's when we refer to someone who has no idea of what he or she is talking about. That’s different from a designer expressing this design rationale. In this case, we are referring to people who has no subject matter knowledge, lack of a valid opinions or has no idea of what problem he or she is trying to solve. They are not misrepresenting or lying; just have no credibility, insight to anchor upon. I am using a different definition that Frankfurt. This is a very different kind of bullshits. And I am very good in recognize bullshit and never hesitate to dismiss them. I actually make that process quite painful for them. Ask anyone who have worked with me.

Innovation Doesn't Need Best Practices. It Needs Weird Practices!

 
I have been approached by many like-minded people from all lover world saying how much they like our proposition. Today innovation is no question the hottest topic but executives are generally disappointed in their ability to make innovation work or making tangible outputs or results. Even trying to infuse an organization with innovation is often far more frustrating than many can imagine.

There are no best practices in innovation. There are no best organization design or structure for innovation. There are no knowledge management systems or collaboration tools to make innovation less risky. There are simply no straight paths to innovation. Corporate cultures are one important driver of innovation and same as outside partners.

Our innovation experience convinces us that a disciplined focus on three fundamentals may produce the building blocks of more effective innovation. A first step is to formally integrate innovation into the executive planning agenda. In this way, innovation can be not only encouraged but also tracked, and measured as a core element in a company’s growth aspirations. Second, executives can make better use of external talent for innovation, people who bring proven tools and multi-disciplinary thinking. Bring them in as your innovation partner and have a formal innovation program that span across different business units and geographies.

Finally, identify leaders to help foster an innovation culture based on creativity and trust. In such a culture, people understand that their ideas are valued, trust that it is safe to express those ideas, and oversee risk collectively, together with their managers. Give them space to experiment.

Innovation remains one of the most poorly undertaken functions within the modern Fortune 500. Serious doubts continue about the innovative capacities of the large, diversified firms. Blame it on bureaucracy or organizational form. These challenges have long been recognized and researched by academics. Excessive hierarchies, lengthy decision-making, and resource allocation process are just some of the all-too-common features typically and frequently cited as being found in these organizations.

Our Latest Trend Forecast: Widget Culture, Crowd Madness, Eco-Maniac, Privacy frantic and Nearly Free.

A very busy Sunday night trying to get ahead before week starts. I have been getting lots of calls and emails from organizations that want to discuss equity partnership with Idea Couture last few weeks. They range from agency holding companies to big tech players. Will continue with these dialogue and in the meantime work out our 2 year plan. Just reviewing our latest trend forecast for the next 18 months and I thought I would share some of them with you here.

Widget Culture: I don’t know how many new widgets are being produced daily, expect this to continue and expand into mobile. The life span of these widgets will be shorter but adoption will be much faster. It is like fashion. We will be flooded with branded widgets. Including strange one that allows us to figure out what causes sudden jumps in searches for some of the strangest topics and/or people.

Crowd Madness: We will see crowd-based business model pops up everywhere. Although many are not exactly feasible or scalable, expect to see a few big winners. This is the most powerful trend that most companies underestimate its impact and implications.

Eco-Maniac: We will get so tired of these messages and claims. Eco-message will become so uncool as consumer can see through the talk and want the walk. There will be Eco-maniac communities that monitor what companies do or what they say they will do.

Privacy Frantic: Digital intrusion is becoming a big issue as we make our way through everyday life, data is collected from each of us, frequently without our consent and often without our realization including surveillance cameras, location-based system and social graphs. It doesn’t take much to put the pieces together. The other problem is when our intimate information is removed from its original context and revealed to the publics, we are vulnerable to being misjudged on the basis of our most embarrassing, and therefore most memorable, tastes and preference.

 

Nearly Free: I am not referring narrowly to free content.  There is a big disconnect between people who are in the business of content, the law and digital culture. We see studio moguls, recording executives all seeking to impose what Lessig calls an 'extremist' agenda by divorcing copyright law from its moorings in the Constitution as a balanced copyright bargain struck between creators and the public. Instead, we're now seeing a new brand of intellectual property, where digital 'property' rights are valued above all else and "piracy" is portrayed as the common enemy. Outside of this, many things can still be free? According to Chris Anderson, “Today it's digital technologies, not electricity, that have become too cheap to meter. It took decades to shake off the assumption that computing was supposed to be rationed for the few, and we're only now starting to liberate bandwidth and storage from the same poverty of imagination. But a generation raised on the free Web is coming of age, and they will find entirely new ways to embrace waste, transforming the world in the process. Because free is what you want — and free, increasingly, is what you're going to get.”  I don’t think that will the case. There is now such a thing as a free lunch as I often tell my kids. We can expect a free version for everything but once you are seriously about using it, you will pay. It is nearly free only,

Are You Trained To Tell Good Stories? Do You Understand The Power Of Narrative in Business?

We know all children love stories. Here's J.K. Rowling, unarguably the master story teller of this century. When my kids were young they have always loved stories. When my oldest, was 10, I told stories to him every night before he went to sleep. I made up all kind s of crossover stories which I turned super heroes into 6 year olds. Their favorite ones were about how Batman struggles with math in school and he imagined he could do extraordinary things. He decided to put on this Bat suit band protected his classmates from bully. They found that story funny. My younger son have continued their brother's love of story and at 14, he is asking for stories from his older brother.

American psychologist Jerome Bruner, author of the influential essay "The Narrative Construction of Reality, has documented that children, as early as two years old, show that "they understand the stories that their families tell them, and they start to tell their own stories, and in particular start to tell stories to themselves as part of their first efforts to make sense of their lives." This supports the notion that all of us are hard-wired to tell stories, somehow not everyone know how to use that skill.

When I was working with Michael Coyle in a very exciting strategy project (he was my client as Chief Strategy Officer of Intrawest), I see him as a great story teller. He told wonderful stories of travel experiences and how those inspire people and change their lives. He truly understands the power and art of storytelling both  external to customers and internal to investors and board of directors.

What is it about stories and storytelling that seems to resonate with many of us? I’ve seen many bad presentations that bring out slides after slides of facts that hasn’t for a story behind it. What is a bad presentation? One that doesn’t tell a story or the story is not personal, authentic or inspiring.
Businesses tell stories all the time, for customers, for investors, for staff. Designers tell stories all the time. Musician’s job is to tell stories. Let's take a look at the kinds of stories businesses that are being told every day.

There are brand stories (the stories what a brand truly stands for), marketing (the stories of how customers love to our offerings), and promotion (the stories of what a good deal this is). We also use stories for investor relations, recruitment and for mergers and acquisition. Businesses tell stories about their past and their futures.  Stories are how we remember; we tend to forget power points and bullet points. Business people not only have to understand their companies' past, but then they must be prepared to tell stories of the future. And how do you imagine the future?  Part of Idea Couture’s innovation process is storytelling. As stories, we create scenarios of possible future and as groups we try to anticipate the threats and opportunities. It is very effective way to talking about the future and potential disruptions.

Storytelling was probably developed in archaic times as a means to organize vast and confusing amounts of information. It retains that function and becomes particularly important in transitional times such as the present. Cross media storytelling is becoming a core skills for marketers. As traditional markers of identity such as ethnicity and class become elusive, individuals, and companies as well, need to articulate their stories in order to define themselves.  Storytelling, arguably the most traditional of arts, in the context of a culture dominated by emerging media,is the mostt important skills people and institutions need to learn, leveraging the power of narrative. 

Do you have your story ready?

Passion, Commitment and Intuition - Three Must Haves For Start-ups

 
This week is a no travel week so I am using the time to catch up with my VC friends to see what they are up to. I was talking to Rick Segal (JLA Ventures) today about the state of investments in the current market. On the topic of finding/funding the right people, we both agreed that while it is easy to transfer the intellectual capital of a start-up idea to a new hire, it is extremely difficult to transfer the emotional capital so the person with the expecation that he or she will run the start-up with the same level of passion and commitment. 

Passion, commitment often comes with intuition. In the crazy world of never-ending unknowns, human-intuition can prove to be very useful as a reliable alternative to painstaking fact gathering and analysis, because there are not facts. Great start-up manager often rely on their instincts than on facts and figures in running their businesses.

Let me explain why. The best story comes from classic of military strategy (as a business strategist for 20 years, I can tell you all stories from Carl to Mao). The word “strategy” entered the English language in around 1810, when Napoleon’s success as a battlefield general made him emperor of Europe.  His enemies started studying how he did it so they could learn it too and defeat him.  Clausewitz’s account of Napoleon’s strategy matches amazingly well what modern neuroscience tells us about flashes of insight. For those who have no idea of who Clausewitz (1780–1831) . He was a Prussian general and military strategist hevilily influenced by the Napoleonic wars in which he fought. 

Clausewitz had a four steps approach. First, you take in “examples from history” throughout your life and put them on the shelves of your brain.  Study can help, by putting more there.  Second comes “presence of mind,” where you free your brain of all preconceptions about what problem you’re solving and what solution might work. Third comes the flash of insight itself.  Clausewitz called it coup d’oeil (which is French for “glance”). In a flash, a new combination of examples from history fly off the shelves of your brain and connect in that split second.  Fourth comes “resolution,” or determination, where you not only say to yourself “I know what? I have an idea"!

The most difficult one is the third step “presence of mind”, when you need a sense of what’s the best strategic option, you will need to put away your analytical mind for a few seconds, clear your mind from false paths and let your intuition go to work. At best, an intuitive leap can create a breakthrough. "When you're entering an area where the unknowns are high, and experience is important, if you don't rely on intuition you're cutting yourself short," according to Howard Gardner (a professor of cognition and education at Harvard). 

According to Einstein, "There are no logical path to these laws. Only intuition resting on sympathetic understanding of experience can reach them."

Should You Build Your Business Strategy Like Doing 'Tai Chi' - It's Non-linear, Adaptive and Is All Judo-Economics

 
Strategic planning today is seldom strategic. Many companies label their operations meeting as strategic planning. 90% of the times they use a top-down formal process of articulating a vision and translate that to actions, assuming the word “freeze” while they execute. This sense of disappointment was captured in a McKinsey research based on 800 senior executives: just 45% of the respondents said they were satisfied with the strategic-planning process. Moreover, only 23% indicated that major strategic decisions were made within its confines. Given these results, managers might well be tempted to jettison the planning process altogether. These are all smart people, so what is the problem with planning?

Think about a chess game, no one plans for than 5 moves. I cannot imagine one can plan 50 moves until victory without knowing how the other player acts. In the crazy world of business, it is a chess game with more than 2 players and the rules are changing as they play, imagine how dangerous it is to have a strategy that cannot reacts or keep pace with changing environment, responding timely to competitive actions and changing direction and at the same time empowering people throughout the company to make the relevant informed decisions. I have been a strategy consultant for 25 years; I have seen these mistakes happening all the time.

Here’s some insights from ‘Tai Chi’ which technically be translated as the 'Supreme Ultimate Force'. The notion of 'supreme ultimate' is often associated with the Chinese concept of yin-yang, the notion that one can see a dynamic duality (male/female, active/passive, forceful/yielding, etc.) in all things. 'Force' can be thought of here as the means or way of achieving this ying-yang, or 'supreme-ultimate' discipline.

Let’s look at the combat aspects of Tai Chi, which can be applied to business strategy. In Chinese philosophy and medicine there exists the concept of 'chi', a vital force that animates the body. One of the avowed aims of Tai Chi is to foster the circulation of this 'chi' within the body, the belief being that by doing so the health and vitality of the person are enhanced. The way things happen and the behaviors occur are always through on going opposition between different requirements, desire, corporate intent, market demand or values. There are always things to be reconciled. What one has to recognize is that there is an on going process in which these things come together and translate into something that works. Business strategy is a purposeful adaptive system that constantly adjusting to market demand but pushing to a direction. Maintaining that adaptive system is part of getting the 'chi' flowing.

Let’s use the two-person exercise called 'push-hands’, a 'Tai Chi' skill that can be applied in strategy. The concept is to be sensitive to and responsive of your competitor's 'chi' or vital energy. It is also an opportunity to employ some of the martial aspects of Tai Chi in a kind of slow-tempo combat. The emphasis in Tai Chi is on being able to channel potentially destructive energy (in the form of a kick or a punch) away from one in a manner that will dissipate the energy or send it in a direction where it is no longer a danger.

In business strategy context, the ‘chi’ is the deep strategic core of your competitors, their dominant logic or view of the industry that drives that actions and tactics. With that knowledge, you can predict your competitors’ moves and stay ahead of the game. Getting the ‘chi’ also means getting a pulse of emerging trends that can help define potential demand for a company's future products or services and where capacities are being built and when prices will drop etc. Here, disruptions are considered part of system and it is not trying to avoid or ignore them, but to embrace and leverage them. When a strategy is not agile, it causes great firms to fail. The cognitive failures that companies experienced are not normal accidents or mishaps, but a fundamental problem in our planning process.

The ‘push hand’ exercise is like a posture that best positioned against uncertainties whether you’re dealing with the music industry, nano tech or bio tech. Uncertainties offer opportunities, they may offer higher returns and lower risks for companies seeking to shape the market. When your industry is transitional by nature, often emerging after major technological, macroeconomic, or disruptive technologies, 'Tai Chi' concept can be most helpful.  Since no player necessarily knows the best strategy in these environments, the game is to provide a evolving vision of an industry structure and standards that will coordinate the strategies of other players and drive the market toward a more stable and favorable outcome or a standard or platform. You need to move from defense to attack mode back and forth. It is not about simply applying force or market power in this case. 'Tai Chi' is based on the principle of the soft overcoming the hard. In this case, you cannot force everyone into a standard or platform, no matter how dominant you are. Direct opposition of another's force is strictly discouraged (price war is a violation of Tai Chi principle because one one wins), and great emphasis is placed upon borrowing the force of the opponent and using it to one's own advantage. The idea is use an opponent's own strength against him, thereby allowing the weaker and slower to overcome the stronger and faster opponent. Just imagine if your organization can be organized this way?

Look ay Yahoo today, not only the lost their ‘chi’, it is reacting to outside forces and have no control over their destiny. Some 40 to 50 senior executives and engineers have left Yahoo since the beginning of the year - at a pace that appears to have accelerated in the last few weeks. At least five key executives, including Vish Makhijani, senior vice president of Yahoo's search group, and Jeff Weiner, executive vice president of the company's network division, were reported to have resigned this week. Microsoft is making some smart 'Tai Chi" moves, whether they get Yahoo or not does not matter. Even if they don’t get Yahoo, they have done so much damage to Yahoo that drastically reduced their threat to Microsoft…all without spending a penny. That’s a good move. In an effort to highlight its efforts to recruit engineers with Internet search expertise, Microsoft this week placed an ad in the San Jose Mercury News, based next door to Yahoo's hometown of Sunnyvale, Calif. Either I have the company, or I get its brains. I am good with both.

Am I Better Off Being An 'Imitvator' Than An 'Innovaor' ?

 

Leaving London and heading home for the weekend. A question that came across a few times this week during my keynote is 'how important it is to be agile'. My response was speed and agility is becoming a major competitive advantage today and it is going to be more so in the next decade. Speed doesn’t necessarily mean being first, you can be choose to be a strategic fast follower and there are plenty of advantages to that. There are two ways to play the innovation game, either you are a true ”innovator” being the first in what you do or you can be an “imitvator”. You innovate while imitate and learn quickly from other people's mistakes.

It is estimated that there were over 50,000 new products introduced into the consumer products sector last year, up 77% from 10 years ago. Since the typical store has only 40,000 SKU’s, it can be pretty difficult for a consumer products company to succeed today! Clearly the world of retail has become ultra-competitive and I’ve been giving keynotes to consumer products companies on how innovation and creativity can create a path out of this madness. Creativity and innovation with retail, financial and consumer products companies involves understanding the reality of the challenge that exists, and innovation strategies that can take your organization forward into the world of hyper-change that is  not slowing down anytime.

There are lots of examples of firms pursuing a "fast follower"  or "imitvator" strategy. You can also look at this as an exploiting other people’s innovation (OPI) strategy. Every one can learn a thing or two from Japanese firms about “imitvator” and, importantly, moving beyond that becoming true innovator. It is almost like a fast track program to play. It applies to both technological-based products to just consumer goods. A range of orthodoxies is making it hard for them to develop breakthrough products as Chinese manufactures are fast to catch-up. Since they have the manufacturing base and vast local market to support any development.

In the past, innovation from CPG mostly in the form of a steady stream of introduction to convenient, high-quality products—ranging from disposable whatever to frozen dinners—that changed the daily lives of consumers. The last 5 years we see product lifecycles were drastically shortened and also seeing poor returns on their investments in product innovation. More new products are being launched everyday, but fewer of them are truly innovative and they end up diluting the market with extensions with unclear customer value propositions.

Their orthodoxies also limit what they can do and these deeply seated mental models shaped by corporate tradition, culture, and values are difficult to unwind. Here are some very common mistakes:

1/ Innovation starts with existing business models and categories and then try to innovate from there. No, you should start not start with business model but instead from customer needs (particularly unserve and unmet needs)

2/ Focus groups and quantitative research are a good way to start to explore trends for innovation. No, those useless data can only tell you so much, start with a deep dive into the everyday’s lives of your customers.

3/ Companies should rely on current team that understand the products market for innovation efforts. No, most executives are not trained to manage innovation, it is not a MBA subject nor some creative brainstorming. You need to have a structure way to play. Go to someone who can bring in a big sandbox. No need to build one.

4/ Companies should come up with as many ideas as possible and "let a thousand flowers bloom." This is usually the problem when a lot of creative people are in the room, everyone will get confused and have no clues of what to do with all these ideas. Ideas generating is only a small part of the innovation process. Innovation is an inherently multidisciplinary, cross-functional activity. Eliminating harmful orthodoxies therefore requires changes across organizations and throughout corporate hierarchies. Clients are looking for help with their approaches to innovation. D-school has been teaching student show to play and that is the best way to enhance any innovation process. Now is time for D-school to play.

How About A D-School And B-School Speed Dating Event?

I was invited to an interesting event hosted by a number of Design school student. They call this a B-School meets D-school mixer event. It was a last minute invite for me and since I am in London I decided to check that out.  The even was organized by Natasha Giezen and friends at the upstairs of the Windsor Castle pub in London Business School. Natasha has an interesting background, she has four degrees (not sure if it is three and she’s working on her fourth) including an MBA from LBS and MA in History and is now working towards her MA at St. Martin’s. She told me a funny story how she was hired as an Accenture Consultant and has no idea of what the job is like. She's a typical corporate misfit..but very creative.

Here’s the original invite for the event:

"Fashion Design - Interactive Teaching - Film, that's some of the fields the designers attending "Designers meet Suits" are into. It's a great opportunity of meeting the people who come up with the creative ideas we are used to dissect. ….Because when d- and b-school students collaborate new breakthrough ideas pop up!”

I think it was a very cool idea. The D-school students were from the MA program at St. Martin College of Design (over the years they produce top talents includes John Galliano, fashion designer and Gilbert and George, 1986 Turner Prize winners) and the B-school people are LBS’ MBAs. They were moving from table to tables to talk about their ideas. It is sort of like speed-dating.

There’s a lot of saying that D-School is the new B-school. Not quite the case in my opinion, I think it is not one of the other, it is both. People like Natasha who operates in the intersection of business and design are the creative (business) class that drives innovation and change in business.

There’s the new German D-school - the Zollverein School of Management and Design. The school is positioning itself squarely in the MBA tradition, even participating in the World MBA Tour, a join international recruiting tour of top MBA schools. There are also special doctoral programs in design science offered with other universities. There’s still questions of companies in Europe will be open to or enthusiastic about or see the need for such an innovative degree. It will be worth tracking how the graduates end up in a few years. That will give us a good leading indicator of what countries, and companies, truly do get it. The whole project of founding a new school started in 1999 as part of a larger program to transform a former coal mining complex in the western part of Germany into a leading international location for design, art and culture.

Innovation in Europe .... Some Random Thoughts

Berlin is now known as the hippest city in Europe according to the people around me. I guess they compare Berlin to New York City in the 1980s due to its cheap rents and prices, ubiquitous graffiti, and outpouring of creativity. They convert a lot of the older buildings on the former East Berlin into clubs. Since the Berlin Wall came down, Berliners have gone through massive reconstruction, mostly in what was formerly East Berlin. The heart of the city, the Mitte district, has been totally rebuilt, though remnants of the communist regime still remain. On the Museuminsel (Museum Island), the glories of Berlin's neoclassical past have been restored, including the Pergamon Museum, which houses reconstructions of structures from Ancient Greece and the Middle East. The 19th-century Reichstag building, which is the new seat of the German parliament, gained a modern glass cupola to replace the original dome destroyed by fire when the Nazis came into power. The area undergoing the greatest change is the Potsdamer Platz, where the largest of its high-density urban developments inaugurated in 1998 added 19 buildings on over 730,000 square feet of land. At the 1998 opening, the Mercedes-Benz marketing headquarters and the Berliner Volksbank in Potsdamer Platz resided alongside hundreds of shops and restaurants. I am happy to be back here this week to present a keynote topic on innovation. What a great crowd from all over the world. Been doing this for a long time and I can’t imagine I keep still having new stories to tell. But it is a hot week, hey it’s only June.

Innovation faces a different challenge particularly in continental Europe The current emphasis on innovation as a source of industrial competitiveness was put in Europe in early 90’s. An Integrated Approach to European Innovation and technology Diffusion Policy’’ in 1993, which stated that ‘’ Innovation and technology policy has an important role to play in developing the competitiveness of industry in the face of global competition and in improving the quality of life. They will face serious challenge when India and China continue to push forward with innovation in the bottom of the pyramid.  Even for highly developed countries in Europe  like Germany and France struggle with real bottle-neck in the research-development-innovation system is the transfer of research results to market exploitation.  There are simply lack of market orientation with how they do it. Innovation is the only way if the EU intends to respond to the economic and social challenges in the next century - the Century for Innovation.

I am staying at the Q Hotel instead of staying with the event organizer. I’m not liking five stars hotel because they look and smell like a hotel. I am boutique hotel fan. This hotel was designed by GRAFT (best known for their work on Brad Pitt's Hollywood Hills studio) and they called this a new super lifestyle hotel, not sure what it means. This 5-star hotel earns a spot on Conde Nast Traveller's roundup of best cool hotels for its inventive and striking design.  Several cab drivers told me Brad and Angelina stay here when they are in Berlin.

There’s lots of innovative thinking in the design of this hotel. First idea, for the first time in a hotel, walls are no longer just the boundaries of a room but actual pieces of furniture. Therefore, guests change their interaction with furniture and architecture and become the actors on the lifestyle stage. It is as if the room has been formed by movement, and it convey energy, tranquillity and inspiration and remind you of futuristic cocoons. Suggest you stay here next time you’re in Berlin. Staff are friendly and it is in a nice area too. The large hotel chains really need to rethink their business. When was the last innovation coming from the big chains? W Hotel I guess, it was a long time ago. Honestly most of these hotel sucks, even if they are 5 stars.

Back to the topic of innovation, I was working on my keynote over lunch. innovation is about doing things differently, doing odd things and doing different things and sometimes crazy things with an intent to change a business, an industry or even the world. Innovation has no best practices and doesn’t need them. It needs aspiration, imagination, new tools and open mind. As a starting point, start thinking different. I used this analogy often in my keynotes, if you are a fish in the ocean, you will be the last one to know what’s water like. It is important to go and get outside help and start to look at your industry to understand where others are focusing their efforts. Industry executives frequently read the same magazine, think the same problem (the idea of an industry is everyone in the same business, solving similar customer problems and often making the same return on capital deployed), and this leads to parallel agendas. Then comes the best practices (tier-four) consultant to help you to benchmark your operations and become even more like everyone. This is a proven formula to mediocrity and a path this is familiar to many.

First thing to start for innovation is to look beyond your industry not only the immediate threats but also for opportunities to borrow ideas emerging in other industries and adaptable to yours. At Idea Couture, we call it “Comparative and Competitive” analysis.

Second thing is to go deep into the lives of your customer and understand their needs, desires and jobs-to-be-done as well the rituals of getting those jobs done. Our anthropologists spend weeks in the life of customers to capture those moments where they need help and often those unarticulated and unmet needs are a great source of innovation ideas. Setting the right climate is another key factor.

You need a structured approach to play and these sessions need to involve outside people beyond the company’s team. Idea Couture’s NoodelPlay uses a mulit-workshop setting with a structures play approach to bring these ideas to life in a story telling fashion. This is where we apply ‘design thinking’ concepts to strategizing. As needs are uncovered and business concepts emerge to address them, the discovery effort shifts to economics of delivery and industry competitive dynamics. To be continue next week.

Social Enterprises - May Be The Best Solutions To Many Of Our Problems

I picked up an old copy of a Harvard Business School Reunion Magazine (1995) from my garage. Flipped through it and an article caught my attention. It was written by Gregory Dees and Kasturi Rangan (HBS professors) reporting about their research in Social Enterprise. The two of them started many years back the school’s initiate of Social Enterprise. They developed field studies and courses in Social Enterprise, which is a second year elective. 

Rangan has always been interested in “social marketing”, which is marketing intended to make socially beneficial changes in the behavior of individual and organizations. I think this is a very interesting idea, if marketers start thinking about their role is beyond selling a product, that’s the starting point of customer engagement marketing. It is particularly interesting to look at that from today's proliferation of social network which can become a powerful platform for social marketing. here is still a lot of work to be done in designing the optimal structure of a social enterprise to achieve a double or triple bottom-line.

More and more private organizations are stepping in solve many of the nation’s social problems. Social Venture is now the coolest thing for high-flying MBAs. I’ve been having  a lot of discussion with people who are interested in Social Ventures. Just the other night I was watching a TV program on social ventures. A great story about two women, Carol Chyau (Taiwan) and Marie So (Hong Kong), who were classmates at Harvard Kennedy School, founded ViD (Venture in Development). They share a passion and perseverance to bring sustainable development to the China.

What’s their big Idea?  Their vision is growing the field of social entrepreneurship in Greater China by identifying, incubating, and implementing ideas that have the potential to become sustainable business enterprises yielding quantifiable direct social benefits.

The economy on the coastal cities of China is booming, serious social ills are exacerbated by widening income inequality, environmental degradation, and loss of social safety net. Social enterprises may be a possible solution; there is very little understanding of the concept. Their mission is to catalyze the creation of more social enterprises in Greater China. It uses its own case studies to generate awareness and coach other aspiring social entrepreneurs. ViD will also implement its own enterprises, such as Shokay and Mei Xiang Cheese Farm, both of which develop high-end products from yaks in Western China to bring to the international market.

Take Mei Xiang Cheese Farm, a sustainable yak cheese industry in the village of Langdu. It is a community of ethnic Tibetan yak herders who live in an isolated fir-lined valley not far from the border with the Tibetan Autonomous Region. Every morning, nomadic yak herders deliver stainless-steel pails of milk to the village's cheese factory, a log cabin equipped with wood-fired burners. Inside the factory, villagers trained by a US dairy expert begin the process of turning the milk, which is higher in fat and protein than cow's milk, into cheese. It takes around five hours to produce each batch. They also produce a harder Italian variety that can be aged and spiced up with other ingredients.

Another interesting social venture is Sustainable Health Enterprises (SHE) in New York. Founded by Elizabeth Scharpf, another graduate from Harvard’s International Development Program and Business School is an entrepreneur who has spent most of her professional career starting up ventures or advising businesses in the health care industry.

What’s her big idea? Unleashing girls' and women's economic potential by starting up female-run franchises that manufacture and distribute low priced, high-quality, and environmentally friendly sanitary towels for domestic and international markets.

Sustainable Health Enterprises (SHE) will fulfill girls’ unmet need by developing a market-based solution in the form of a franchise model led by young women to manufacture and distribute affordable, high-quality, and environmentally friendly sanitary towels for domestic and international markets. SHE will ensure the development and uptake of a reliable product by sourcing local, inexpensive raw materials, leveraging existing networks, and facilitating a sustainable business model operated and owned by women in the community.

These are great stories and I think Social Enterprise can potentially soft many of the problems that goverment and non-profit simply cannot soft.

Walmart's Latest Innovation - It's Free Classified

 

Two interesting businesses launched this week and both worth special mention. First one is Wal-Mart has decided to compete with Craiglist and Kijiji (a eBay company), they quietly launched a free online classified service, and sell practically anything to anyone. It is still at pilot stage and currently carries 30 mil items. I searched for Tiffany and I got this Tiffany bracelet for $135. There's no fees involved for buyer and seller. I don't think eBay likes this idea.

The service is totally free through Walmart.Oodle.com. It is a way to attract their 130 mil customers who shop online every week. The service was provided by Oodle.com which was launched 3 years ago in San Francisco by former eBay Inc. and Excite executives. There is no business model but it doesn't cost much to run it either. The success rate is 50/50.

Former CEO of Technorati David Sifry’s latest new venture is Offbeat Guides, it is a service for printing customized travel books. When you go to the site, it asks you 5 basic questions: Your name, your destination, your trip's dates, where you live, and where you're staying . With that, it goes out to the web and find related content and assemble them. You can tweak the content: If you don't know where you're staying you can be sure the hotels section is included; if you already have a place, you can remove it and save some paper. 

It is probably the first personalized publishing platform. You can add sections on food, events, transportation, etc. Books will always be customized for your travel dates and will be printed with the weather forecasts, exchange rates, and other relevant and timely information like local events happening when you're there. Your custom book will be sent in 4 days four and cost $24.95 (including PDF download). I think this model will ultimately evolved to ad sponsored where the book is free. To make this really work, they need to bring in the local to create unique content. Quality control of the content is crucial. Extreme personalization is next as I can see people looking for the Antique Shopping in Paris, Electronics Shopping in Akihabara or Cosmetic Surgery Guide in Seoul. I like the business concept as many have explored this over the years.



There was this Nile Guide launched a few months ago. Nile Guide is a travel planning and what it does is they aggregate travel data from over 10 sources, including Citysearch, OpenTable, and Expedia, and add its own reports and reviews from local experts for 80 international destinations. It’s then made all of the information searchable from within a tool that takes into consideration both objective and subjective factors related to your preconceived preferences. The four main search types on Nile Guide: food, lodging, nightlife, and “see & do”.

When you search from within any one of them, you can filter the results in real-time using a variety of criteria. For example, you can choose to view only restaurants in a given city/region that are lively, quiet, off beat, romantic, family, or business entertainment etc. And when you're done planning your trip, simply download a PDF of your itinerary for FREE (with lots of ads).

A few more interesting start-ups here for you to check out:

Ffwd: This is a video content site with "social awareness and predictive recommendations.

Lil'grams: Not just another online baby photo site. The most precious moments of your baby's life are countless and now you can keep, track, and share anything about your baby.

SocialMedia Networks: An attempt to build an advertising network for social platforms and apps.

Xumii: A utility that gives you access to your social network contacts on your mobile phone. Pretty cool idea.

Inndustry Breakpoints Are Where Innovation Most Likely To Happen

 
You probably hear about S-curves or industry discontinuous all the time and wonder these are just academic theories or real. If they are real, how can one create an industry breakpoint and what are there any pre-conditions? To make that happen, companies must be able 1/ to learn about the breakpoint potential in the industry and have a sense that when it will happen and 2/ commit to making a quantum organizational change and 3/ have an economic engine (cash flow) to sustain the transformation.

Can you make innovation happen within a time frame and use that to create an industry breakpoint? It is not easy in large organizational settings when there are so many silos and the systems and structures become the barriers. Creating a break point you need front line people to scan and look for new opportunities and this is often not in their job descriptions. Some managers need to play the role of 'innovation connector' to co-ordinate and balance the application of ideas within the mainstream organization or creating new products or services.  Front line managers are a key part of any innovation process and they must be given a mandate to discover new opportunities. It means letting go for senior management and allow people to make some mistakes. Senior manages' roles would be to develop dynamic value creating relationships with key stakeholders extending beyond the enterprise.

There are generally two types of breakpoints. 1/ Divergent breakpoints tend to occur at the embryonic stage in an industry or later on in the life cycle when technological innovation can successfully rejuvenate a maturing industry. 2/ Convergent breakpoints usually occur in the transition from embryonic to exponential growth. The standardization (emerging platform) of productions systems, as in the introduction of mass produced computer manufacturer, or of formats, as in the choice of video delivery, are good examples of convergent breakpoints. Most technology-based products are mostly impacted by convergence breakpoints.  One example is Adobe decided to compete in the  'Office Productivity' software space and go head-to-head with Microsoft Office. Adobe has just launched their version of an online office suite complete with word processor (Buzzword), web conferencing/whiteboard app (ConnectNow), online file sharing (Share), file storage, (My Files), and PDF converter. 

Another example would be the Nettop. Smartphones are beginning to occupy the same turf that Netbooks are targeting. Communication devices (iPhones and blackberries) are morphing into full fledged computing devices and computing devices that are becoming communication tools. Meanwhile, both categories cost about the same.  So is it your iPhone or a Netbook? These categories are meeting in the middle and these devices will increasingly become comparable–especially as phones are used for data more than voice. Perhaps you’ll buy both types of devices and carry them around, but I doubt it. May be only for the Geeks. Can you really lug a laptop, smartphone, a camera, music player and mobile Internet device around. Will you leave your laptop at home for something that has less computing power? How many devices–even at $399 a pop. That's making life more difficult for me, no easier. 

So how do you recognize industry breakpoints? Here are the early signs:
1/ falling demand for standardized products (look at film, did Kodak see it coming?)
2/ declining margins in the industry (the PC industry, can Dell get out of the commodity game?)
3/ rationalization the availability of new sources of supplies or technologies
4/ start-ups that changes the competitive value of the industry

And indicators of convergence, on the other hand, include:

1/ the breaking down of traditional customer segment groups
2/ convergence between previously separate industries
3/ a relative absence of potential new entrants
4/ supplies and technology becoming standardized and commodity-like
5/ accelerated shift in bargaining power downstream towards the distribution channels

When dealing with emerging technology it's important to scan underlying tends to provide a clearer picture of the real value it holds or how adoption happens. Market research isn't helpful in terms of identifying industry breakpoints. That's when you need an anthropologist? Here's an example:

Swisscom (The AT&T of Switzerland) has a User Adoption Lab run by anthropologist Stefana Broadbent and their research has looked at usage patterns associated with different communications technologies. Based on observation, interviews, and user logs conducted across several European countries they found that despite the opportunity to keep in regular touch with a wide circle of friends through their mobile phones, the typical user spends 80% of their time communicating with just four other people.  One other interesting observation was how people used different communications technology in quite different ways. The fixed line phone was found to be the "collective channel", where calls are made "in public" because they are relevant to others around them. The mobile phone was predominantly used for last minute planning and to coordinate travel and meetings. Texting was used for "intimacy, emotions and efficiency", email for administration and to exchange documents and other media. While instant messaging and internet voice calls are "continuous channels" open in the background while people do other things. One of Broadbent's conclusions was that "each communication channel is performing an increasingly different function".

A remarkable discovery was that despite increased availability of essentially free voice communication, there has been little observed growth. Instead the increase has been in written channels. Broadbent observed, "Users are showing a growing preference for semi-synchronous writing over synchronous voice". We appear to be increasingly happy to multi-task and interleave our communication on a constant basis, irrespective of whether we are at work or at home.

We Are Carrying Too Many Cards? Someone Needs To Solve This Problem.

 
I've come up with two great ideas today. Here’s a big one for Facebook ....create a digital card that can replaces all the membership cards to replace all the cards that we carry and jam our wallets. Make it the size of an iPhone and I can just flip through my card on a touch screen. Or make that application reside on an iPhone.  My membership links all shows up on my Facebook page as an Icon and so that becomes the central place for me to look at my points from 6 hotel chains, 4 department stores, 4 airlines and 2 car rental companies. That gives me another reason to spend more time on Facebook.  Think about it, all membership cards in this world should be digital (all you need is a number anyway) and member can be connected through a social network. Customer or member support communications should happen on Facebook too.  Of course, this is just an idea and I don’t think it is happening anytime soon, but I definitely think it's an idea worth playing with.

Another idea is about emails. When email was first invented, it was a great tool for business and personal communications. The came web-base email, which makes it better. It makes it easier for us to share information and we are becoming more casual about it. Imagine if I have to pick up the phone or write you a fax to tell you a piece of news, I probably won’t do that unless it is important. Today, all we do is click forward and information gets circulated and God knows who. Is that good or bad? Imagine, we can track these information and analyze why and to whom they’re being shared? What new information will that give us?


These interactions reveal characteristics not only about the individual, but their social networks. Yet, this data is often obfuscated by the system, making it difficult for people to easily grasp the patterns and social interactions that they engage in daily. Imagine if a global company can track their 10,000 workers across the globe and how information is shared as well as the patterns. Imagine a system can text-mine these emails (without some one looking at them) and give a general mood of how key managers are responding to a certain idea or policy? A system that explicitly revealing the social networks patterns that emerge in email, and emphasizing the structural forms of one's network and providing an interactive tool for people to reflect on their own habits. Imagine we allow people to manage their social network as one aspect of managing the context of their work and lives. This is another $100 million dollar idea. What do knowledge workers learn? How do they decide what to learn next? What motivates them to share ideas? These questions are central to the challenges of knowledge-based organization.

Look under within the social fabric of any organization that connects people to people and people to content and turn content into knowledge. Relationships, trust and serendipity are key. This is the connective tissue of Enterprise 2.0.

The structure of one's social network conveys a great deal about an individual both personal and professional lives. How often does the individual maintain distinct relationships between groups of people? Do they have a few close friends or a large collection of less regular interactions? Are clusters within one's network separated based on roles or interest?  Is he or she a connector? Someone that has the power to shape and mobilize.

What about tools that allow us to curate our social network image? What are those tools looks like. ‘curation’ of one’s identity and self-image among different (both work and play)) social networks is a very interesting concept. Better not talk too much and save the idea for the next incubation project.

What Do You Know About Business Strategy? It Ain't What They Teach You In B-Schools

Myth No. 1: Every CEO is a strategist. It is true that most CEOs are strategically minded, but many are not big picture strategist. Their job is to maintain the balance between winning today (operations) and winning tomorrow (innovation) plus developing talents and building capabilities for the future. That alone is more than a full time job. That's why CEOs hire strategy consultants and people like me have always been the secret services equivalent for CEOs. 

Myth No. 2: Strategy is a competitive exercise. Half-right for this one. As much as it a competitive exercise to maintain market leadership, it is even more important to what disruptions are coming your way and how to deal with them. It is crucial for any business (more so for technology-based and time-based competition) to see what new value curves that organizations have blind-sighted due to corporate inertia. 

Myth No 3: Every MBA is a strategist. 100% wrong for this one. In my experience (which I've hired over 500+ MBAs over the years) MBA school have provide good business fundamentals, they don't make everyone a strategist. I have seen many MFAs that think more like strategists. Strategy has nothing to be with business schools, well, a little bit. 

As an economist by training, I find this is probably the most relevant discipline to strategy development. The infusion of industrial economics concepts has been powering strategy for years, providing considerable rigor and substance to business strategy. Understanding industry structure and source of market power are key to strategy but over emphasis of that create a new problem, which is the larger sense of purpose for a business and its reason to exist in the world. 

Purpose is really the heart of any business strategy and should provide the guiding principle for corporate strategy (and brand). A business must have a clear purpose and with then comes a direction. A business without a purpose is like a flight without a destination. If purpose is not there, executives and front line managers will not be able to make the right trade-offs. What's a purpose? It is what a company's reason to exist and what the people deeply believe in. It is also something that makes the company truly distinctive. And guide how much they are willing to compromise. It is like soul-searching sometimes, but a company needs a soul too (although many function without one). This one requires more than the left-brain thinking of MBAs and also the left-brian thinking of a creative artist. It is a human endeavor in the deepest sense of the term. 

For many once great companies, the founder usually have a clear (sometimes unarticuated) purpose. As the company grows and professional managers take on the day-to-day running of the company, somehow that is lost. So there's a need to re-create these purposes. Purpose is crucial because of its scope and ubiquity. It is large, much larger than any other elements in a business model. One can argue you cannot have a business model innovation without re-create the purpose. 

Creating purpose is much harder than creating a strategy. There is no textbook for it. It is much more involving. It is a choice to pursue your destiny--the ultimate destination for yourself and the organization you and your partners founded... It draws equally upon your emotional commitment and intellectual whole--it calls upon everything you are (you training, your life experience and your very core)…everything you've experienced and everything you believe in.