innovation playground Idris Mootee

What Is A Manager? Who Needs A Manager? The Word "People Manager" Sucks.

There’s so much myth about management. This word today has less and less meaning. Just like business administration, I have an MBA but ever see myself as an business administrator or manager. It is a pretty silly name. When people try too hard to be a manager and that’s where problem begins. You can manage a project or process, you cannot manager people, unless you’re running a production environment. When people bring their brains to work, how do you manage it?

When you build a high performance culture, no one needs to manage anyone. You pick not only smart people but also people that have a passion for success, strong analytic mind and/or creative self expression somewhere deep inside them. They are not managers and not aspire to be one. They are good coaches and leaders. They want to be part of something big, bigger than an individual, meaningful, to make a contribution, and to find fulfillment in what they do. You can only inspire, coach and support them, there’s nothing to manage. If you’re telling me you are actively managing your top people, then you these yearnings are often managed out of people in the unrelenting quest for predictable mediocrity or satisfactorily underperformance.

People are seldom encouraged to be themselves, have fun, or seek fulfillment in their jobs. Instead, they are pushed to just do their jobs, and not bringing their true capability to the organization. How often you heard companies say their employees are their most important, this has always been the biggest bullshits. This is the root cause of the overmanaged and underinnovate problem. For 25 years, I made the choice and had the opportunity to be associated with only the best and the brightest. The minute I see deadweight, I get rid of them.

How often you see that company are saying how much value employees and then seeing how quickly they get rid of theme when earnings fall short, but at the same time offering big bonus to CEOs for successful restructuring. Most ridiculous examples are some CEOs even enjoy big benefits if they die. They call this golden coffins.

 
Let's try to understand how it works. Companies pay incentives because they want to retain their CEOs and the senior management team. If they die, there’s no one to retain and why are they paying these big sums? Help me to see the logic behind it.

One company in Texas (I won’t name but it is not one of my clients) would have owed $4.4 mil in salary for its deceased executive.  Also his death would aslo trigger a $158,400 payment listed as “car allowance”. Not sure what car you drive when you're dead.

Some more examples here:

- Comcast is committed to paying the salary of its CEO for 5 more years after his death, along with five years of bonus, really not sure how to justify that. It was values at $60mil.

- Shaw Group is committed to pay $17.4 mil after the death of their CEO as non-compete payment after death. Again not sure how a deceased person can come back and compete.

- Occidental Petroleum’s contract with its CEO called for his salary to be paid until his 99th year birthday, dead or alive. He died at 92 in 1990.

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,

This Is Month 10 Of Our Company, Things Are Moving Faster And Fatser. If Things Look Too Smooth That Means We Are Not Moving Fast Enough.

Here’s a picture of one of our teams in action (L2R, director of usability and information design Jeff, director of strategy Edwin, head of technical development Souvik and head of new business Nick). Very Hugo Boss looking, which doesn’t happen every day. I think we will be running out of space soon. Every month we’re adding new people (5 this month), Each one of them is carefully picked and must be ir has potential to be the best in their respective discipline. It is the only way to build a great company. That way, I will never have to worry about mediocrity because the system will reject it. Our policy is to maintain ‘deadweight free’ so we can move fast and smart. I hope we can continue to remain agile when if we reach 100 people. The office is getting a lot of good energy lately, just good 'chi' everywhere.

One of our current projects requires us to look at semantics search. It is a very important area and for us is how that would change social media. Semantics search is hot but many are confused of what it is. It is basically a smarter search that allows a system to discern if there is a link between two words, such as money and happiness. We all know that the relationships between the two are complex and both direct and indirect, and can be categorized as such. Our brain seems to comprehend this easily (may not be so in this example), but for a computer it is a very difficult to understand it. We are all trying to solve this puzzle.

So how does semantics search allow technology to refine its search capability? It can automatically place pages into dynamic categories, or tag them without human intervention. Knowing what topic a page relates to is key for returning relevant content. It can offer related topics and keywords to help you narrow your search. Instead of offering you all the related keywords, it directly incorporates them back into the search with less weight than the user inputted ones. I am sceptical whether this will produce better results or just more different ones. If the engine uses statistical analysis to retrieve it’s semantic matches to a keyword then it’s likely that keywords currently associated with hot news topics will bring those in as well.

A semantic search engine generally takes the sense of a word as a factor in its ranking algorithm or offers the user a choice as to the sense of a word or phrase. (This is not the same as what is known as Semantic Web which requires a lot of more human labor to tag everything) Can technology tells what is the content of a text? Or to be more precise: what are the core concepts which must be identified in order to grasp the essential meaning of a text? Or what is its emotion or tone? Or its credibility whether it is an opinion or results of research? The challenge is to locate this central core of the text that holds the essentials of its meaning. This is step one before any attempt at interpretation. Generally only a very small proportion of these text - constitute the foundations of the concepts, if they were removed, the "textual construction" would collapse totally, and the meaning would be lost.

Content analysis consist of the following four steps:
1/ the identity of the main actors,
2/ the relations they have to each other,
3/ the hierarchy of these relations,
4/ the tone and style of the words.

Microsoft is moving fast on this and is rumored to buying Silicon Valley semantic search engine Powerset.
The purchase price is rumored to over $100 million although no announcement has been made. Powerset has developed a technology that trys to understand the full meanings of phrases you type in while searching, and it returns results based on that understanding.
 Microsoft’s strategy is to close the gap with Google’s search engine. Google was quick to dismiss Powerset’s semantic, or “natural language” approach as being only marginally interesting. Behind the scene Google has hired a team of semantic specialists to work on that approach. This is the next race for search and I think the winner will not be Microsoft or Google.

Google’s search results are still based primarily on the individual words you type into its search bar, and its approach does very little to understand the possible meaning created by joining two or more words together. Powerset’s technology is still controversial because, while sexy in theory, the natural language approach is difficult to pull off in practice. Many wonder if the technology can ever be developed enough to be useful within a major search engine. Powerset was valued at a $42.5 mm after the first round of financing just two years ago. Investors expected that the technology it acquired from PARC would help this into a killer app. However, the technology has taken longer to develop than expected. Powerset has a high burn rate, and so a purchase at $100 million is considered a safe result for an area that is also seeing increasing competition (players such as Hakia, Twine and TextDigger are all using similar approaches). I need to dig deeper into Hakia and TextDigger in the coming months and will share my thoughts here.

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.

Google Is WPP, Omnicom and Publicis' Nightmare. Google Plans To Replace The Advertising Industry In Its Totality.

I was in London with clients last week and I also had a meeting with my friend at WPP head office (see picture of their modest head office which houses the best financial minds in the business)  We had a great discussion of how they see the ad world’s future. Despite of the challenges that big agencies are having coping with the digital world, they had successfully bring scale and scope to clients. After the meeting, I am asking myself the same old question: Is Google a threat to ad agencies? How real is this threat?

Google and even Microsoft are competing with ad agencies, not in a conventional sense. Google now owns DoubleClick, which makes it a direct competitor to holding companies such as WPP. Today WPP buys estimated $160m of ads space from Google. If Microsoft buys Yahoo, that it becomes a duopoly. Google’s market cap is $160-170bn, WPP’s is $15b and Ominicom is $14.8b, and even including Interpublic ($4b) and Publicis ($6b) we are looking at a total market cap of $43b, only 25% of Google’s. The four agency holding groups have combined revenue of over $33b, 50% bigger than Google. That gives you a sense of what the market is saying about how they see the future of agencies. Google can easily buy two of the largest holding company for $27b and essentially the largest advertising powerhouse that produced and placed 60% of the world’s ad. A fully integrated network that also becomes a monopoly.

The lines are blurring between the buyers and sellers of online media following (WPP's acquisition of 24/7 Real Media) and suggests that agencies may see online as an opportunity to re-enter the media brokerage business. If that’s the case, it would be a full circle for Madison Avenue, whose roots were established when early newspaper advertising reps like NW Ayer & Sons and JWT morphed into full-service agencies, and adopted a commission-based system that derived revenues from a percentage of media billings. That’s the circle of advertising. Not sure many remember that.

WPP last year generated roughly 46% of worldwide revenue from advertising and media with the rest came from marketing services. WPP digital services accounted for nearly 12% of worldwide revenue, still small but I can see this growing to 20% easily. Two months ago they made an unsolicited offer to buy market-research firm Taylor Nelson Sofres for $1.88 billion. The deal was rejected, but if it went through, it would make them the largest agency holding company in the world. WPP is best positioned among all holding companies in this space despite the challenges with traditional advertising with all big shops.

The competitive ground for the agency groups in the next 3 years will be ‘Digital and China’. Period. Those are the two growth pillars. The biggest problem in the industry is in the traditional media and old school ad agencies, there’s a serious talent and capability gap that no way can be filled, no matter how hard they try. Then there’s a big cultural problem as they are organized around creative directors. It is kind of a star culture; it is the opposite of the web. Our culture is not only collaborative and multi-disciplinary in nature. The opportunity is in the digital. Asking old school agencies to do bring digital to the core is like asking a sushi chef to prepare steak tartar, you think there’s no cooking needed for both. it simply won’t work.

Ad agency growth through consolidations became a common strategy for the last 20 years; the question is ‘size’ the competitive advantage and are large networks more productive? Agencies with global reach have the advantage of offering a single point of contact for coordinating marketing activities, improved efficiencies, greater coherence in marketing ‘voice’, and access to global talent pool. The Interpublic Group is the world’s first communication holding company set up to get around the conflict of interest issue. Member agencies could function autonomously and handle competing accounts without compromising client confidentiality. IPG is still struggling hard today. The total number of global ad agencies has been reduced from 8 in 02 to only 6 agencies in 05. I think we will end up having only 4 left in 2-3 years, ignore the tiny ones MDG etc.

The six current players comprise Omnicom and Interpublic, WPP, Publicis and Havas from France, and Dentsu from Japan. As for performance, Omnicom has the highest revenue and second highest revenue growth rate. WPP had the second highest revenues and the third highest revenue growth while Publicis showed the highest revenue growth with relatively modest total revenues. Havas showed both the lowest total sales and revenue growth. This give you a sense of how each agency groups are doing.

Television Broadcast Is Moving To A Multiplicity Model

Are we getting near an industry breakpoint for the broadcast media and television industry?  Macro forces are forcing a collision between the Internet and the world of video and television content distribution.  This transformation may last for a few good years until the industry fully reconfigure itself.

The Internet’s forces of openness, global reach, social nature, consumer participation and control, and long tail economies of scale will change this industry forever. Digital technology has ushered in all-digital linear broadcast networks, with an expanding spectrum that can support hundreds of broadcast channels, and now potentially thousands of video-on-demand offers. It has lower the costs of producing video, and even lowering the costs required to achieve good production values. This in turn has spawned many new production companies and programing efforts, mirroring the growing range of options offered by cable, satellite and telcos. So any one can produce, edit and broadcast.

BBC decided to offer a large part of its television content free of charge on its website. And earlier, ABC announced it would stream some of its primetime shows in HD online for free.  As networks begin to put more and more of their content online — either on their websites or through services like iTunes — both advertisers  and viewers win. But is the future of TV-watching online? Is the big box we’ve grown up which just turned slimmer and slimmer will become obsolete soon?  I don't think so. There are strong signs that people enjoy learning back as well as leaning forward, they are simply different experiences.

What about the unskippable ads?  What is the experience like? Do we feel captive watching them? Or should it be “less skippable” instead.  Let's say Disney continues to sell episodes of Lost and Desperate Housewives through the iTunes, the consumer will be able to choose whether to buy an episode that is ad-free (for $1.99) or watch ad-full. Is that a fair approach? The big concern is cannibalization as people will not need to sit in front of the TV and can simply click search and play.  Or these multiple streams are offering additional revenue opportunities for content owners? Viewers will be segmented by channel choice and many will use multiple platform.  Is this the future of broadcast?

Think about the world of Nike. They sell their shoes through 12 to 15 channels. From Nike Town to Sports Chain to Online Stores to Outlet Stores. This is not a world of one business model. The world is multiple and we will need to work its complexity for our advantage as well as value add for the consumer. The future of TV broadest is a multiplicity model. 

Sony is toying with the idea and will launch its new show "Angel of Death" on the Web, but it is using an approach that it hopes will drive sales of DVDs and boost other distribution avenues down the road. The series will be released online eight minutes at a time, over 10 weeks, on various Sony-affiliated Web sites. After the Internet run, Sony will release a traditional DVD of the series, adding scenes to tie the pieces together in a movie-like way. Expect to see more of this.

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.