innovation playground Idris Mootee

How Clients Are Showing Interest In Digital Agencies To Serve As The “Lead” On Integrated Marketing Efforts

Ad agencies are cutting people across the board responding to budgets cut from clients. WPP does not expect to see any significant economic recovery before 2010 which is likely be the case. In additional to cost cutting and recruitment freeze across much of the group, they are also announcing plans to relocate the company's tax base to Dublin, a move which the company expects to provide significant tax savings. With 37 acquisitions made over the past 12 months alone, there a lot of companies to integrate. Outside of the pool of smaller companies that they own, their blue chip holdings Ogilvy, Y&R (including Wundermann) and JWT (largest in the US) are becoming more and more irrelevant, these elephants need a lot of attention. On another note, there's a 51% chance that WPP will buy Razorfish from Microsoft, Microsoft wants to get rid of the digital agency but hard to justify a write down. The financial market is not in any shape to support an independent Razorfish, WPP is the only option. Expect an a deal closed in June. 

There are questions about whether these old school ad giants can evolve fast enough. Their thinking is 3-4 years behind and clients see that. And the interactive agencies, most of them are 10+ years old and have their own legacies. They now share the challenges that the ad agencies have and becoming part of the (banner ad and out-bound email) ad factory.

The lines between interactive agencies and direct marketing firms are blurred. Are more so the lines between interactive and traditional ad agencies are also blurring. Today Agency-of-Record Status can go to anyone. Global alignment of agencies is out. So what will the future hold for advertising agencies? Well, we’re beginning to see some of the trends unfold. I wrote about this ten months ago (we produced a report on the future of agencies and the evolution of marketing services).

Marketers seriously question the current and future relevance of traditional media & advertising shops. Will large agencies be able to evolve to meet the requirements of new technology? The answer is simply “No”. Can traditional adv agencies develop strategies that drive “customer engagement”? Definitely not. Their definition of engagement is watching your 30Sec TVC without changing channels. Our definition of engagement is “High involvement interactions between a customer and brand that strengthen the emotional, psychological or physical investment a customer has in that brand and act as advocacy for the brand”.

Perhaps the biggest hindrance of evolution for traditional agencies are organization structure and limitation of talents. The org structure was at least 50 years old if not more, it was not designed for cross-disciplinary collaboration. On the talent side, these agencies used to attract the smartest and the brightest 20 years ago, today those who work there are mainly mediocre (a few bright ones, very rare) people who doesn’t want serious (thinking) work. Their media and account management expertise does not necessarily translate well when faced with demand for technologically-based marketing solutions. Separating media and creative was a smart decision from a cost point of view, but seriously undermine the collaboration of creative media applications.

Traditional shops are slow to react, expensive, don’t get the Web 2.0 culture, and most often, “shooting blanks” and acting in defensive manner. Digital agencies (that go beyond digital) are not only being invited to pitch brands as agencies of record -- increasingly, they're winning. Clients just love the thinking and speed in execution.

More clients showing interest in digital agencies to serve as the “lead” on integrated communications efforts. The uptick is particularly visible among marketers in sectors such as entertainment, electronics, retail and some personal financial services. In short, clients are becoming less and less fixated on the type of agency handling their ad accounts and more on the “strategic capability” and “speed of execution.” In short, BRIGHT and FAST. That makes perfect sense. Clients just come to the realization that their company's plans were going to be heavily focused on digital anyway plus the fact that it can only go so far talking about your brands through paid media (communications), it is much better if you can get your customers to tell your brand stories in their own way.

Some wanted to see what's our office building looks like. It was declared as a historical building.The building is gorgeous. Here are some pictures below.

 

  

What's Transformative Advertising? Here's One That Shapes Public Behavior.

Governments often use mass advertising to educate and shape social behavior. The results are often mixed and we all understand it is not easy to have a change in human (public) behavior. Upgrading faster police cars is definitely not the solution. Here's an innovative idea from a Latvia agency. A local ad agency MOOZ! (Riga, Latvia) was tasked to develop a campaign against speeding and aggressive driving with the goal to in reduce the number of car accidents and casualties. Target audience were those who consider the speeding part of their lifestyles and polices have a hard time chasing them down.

The agency came up with the idea of Organ Donors Certificate as a part of the ad campaign. Agency beleived that the reason for speeding is very social, fast driving is considered to be cool among large groups of the society particularly male age 20-35. Trying to educate them is useless. The agency thought of another social problem - shortage of organs needed.  The idea is during the campaign aggressive drivers are asked to sign their organs to those who are waiting in line for a transplant by signing Organ Donors Certificate. Certificates were issued directly to aggressive drivers during raids by the Latvian road traffic police. So instead of getting a ticket which cost whatever $50, you will end up giving a liver away for driving above the speed limit!!

Not sure how they enforced that but it was effective. Number of victims dropped by 29%. You may not remember the ad, but you will always remember the day you signed your Organ Donors Certificate and devoted your organs to somebody else. Campaign raised as well the discussion of another social problem - the sortage of organ donors, Transplantation Center was very thankful and client had nothing against combined solution, since the main task was to save lives. Still not sure exactly how it works, first timers get to sign away their liver and seriouos offenders signs away their heart? Will find out more. 

The more I think about it, borrow this idea to use on repeated violent criminals.

Herman Miller's Next Innovation Is In Clinics And Hospitals. How About The Aeron Wheelchair?

"Renji Murata PSE CDB Chair" was created by the famous illustrator, artist and designer, Renji Murata. Renji "Range" Murata is a well-known Japanese artist known for his unique style combining Art Deco and Japanese anime elements. He is best known for his conceptual design work on anime series Last Exile and Blue Submarine No. 6. This a great chair for reception area, curious to see if peole would seat on it.

Talking about chairs, I am a big fan of Herman Miller, not only about their chairs but also their corporate culture and management capability. Now they are back at the task to design a chair that will fit everyone, whether short, tall, fat, skinny.  Given this seemingly impossible task, their engineers came back with the Embody chair.

The Embody's colorful fabric seat hides a system of 94 plastic coils. Each compresses independently, allowing pointy bones or bulky wallets to sink in without causing nearby areas to sag. The designers also tuned the springiness of each coil based on its location. The coils under your thighs and the soft backs of your knees give easily so they don't chafe; those under the bones in your rear, which bear most of your weight, are the stiffest. Plastic caps on top of the coils tilt in any direction to hug instead of poke your curves. Too bad I just ordered Mirra for our additional office space downstairs. I still like the Mirra as it was the first Herman Miller non-textile product to meet DFE (Design for the Environment) protocol in the industry.

Herman Miller is no question one of the most innovative companies. Herman Miller‘s CEO Brian Walker talks about tapping the creative network for insights and breakthrough ideas. There are a lot of lessons that others can borrow:

On working with "outside designers" -The driver for us is our commitment to new ideas and solutions. This external network ensures that we are always taking a fresh look at problems faced by our customers without subjecting it to our own filters. If you have only an internal design staff, even an enormously talented one, you are inherently limited by their existing worldview and experiences. Our ability to tap into a broader outside network lets us revisit and reinvent our own filters on a regular basis and get a fresh perspective on existing or emerging problems. This approach has its challenges, but it often leads to the best ideas and breakthroughs. Our creative network is at the core of Herman Miller's DNA.

On “sharing of insights” - The central thing that we've learned is a willingness to follow and give ourselves over to these designers-not lose ourselves, but be open to following them to places that we may question in the beginning. We give our creative network an outline of a perceived problem and let them share their insights as to whether we're on the right path and then enable them to bring their own gifts to the search for a solution. We follow them in their journey without judging too quickly. One of the hardest things to do is not to judge too quickly, based on the first physical appearance of something. Instead, we try to understand the essence of what they're describing in physical form, written form or sketches.

On "global scenario planning"  - Every few years, we do global-scale scenario planning, where we look out a number of years and create multiple visions of how we think the world may change. We ask ourselves, if the world did evolve along one of those paths, how would that affect the way people work, live, and feel? These scenarios give us vectors on which to explore new potential problems and new solutions. Solving problems is where our design work begins. We rarely start off saying, ‘We just want a chair in this price point.' More often, wesay, ‘Here's a problem area that we see for folks. How do we solve it?' Around here we often quote George Nelson, our lead designer in the '40s and '50s, who used to say, ‘Design is a response to social change.'

On "defining business boundaries" - Herman Miller has had several periods of revival or renewal where we have changed our focus. We don't define ourselves as an office furniture company or even a furniture company. Our boundary is around people and human performance. It's around habitat and wherever we can affect the performance of human beings in their habitats. Problem-solving design is at the core of what Herman Miller is, and that can be applied to a broader field and evolve over time. Clearly some habitats have not been primary to us in the recent past, but are logical and natural steps. We have historical grounding in the home, so we can play off of that. Educational institutions have a lot of connectivity and, in many ways, have needs that are similar to the office and the home. And we've had interest in the healing area for many years. Those became the jumping-off point for us.

So what's next for Herman Miller? The Aeron's ergonomics have now inspired the Nala, which has an easy-to-adjust seat designed, in theory, to help people recovering from surgery. Herman Miller's first patient-oriented product for the clinical market, the Nala will go on sale to hospitals in the fall for a list price of $1,800—pretty costly for patient chairs. Even so, expect Herman Miller to make inroads into clinics and hospitals soon.

Marketers Are Partly To Blame For Commodization By Providing Too Many Choices. Marketers Need To See "Less Is More".

Choices are a two-way sword.  Common sense tells the more choices the better and as consumers we welcome more choices.  We are all overrun by brand names, product choices, delivery choices, pricing options and payment options. These explosions of choices together with rising mistrust of corporations together; a bland corporatization of the world, and people just don't know what to believe anymore. More choice can mean less consumption. Companies need to rethink their portfolios.

The world remains divided and even becoming more polarized. There is the maximizer, whose continual search for finer things - the latest LV bags or the newest Blackberry - makes them feel good: it is the paradox of choice, and whatever you have got, it's just not good enough. Then there is the satisfier, who is happy with things as they are. And there is the minimizer whose continuously on a journey to simplify life and stay ‘zen’ and then there are those at bottom of the economic pyramid who don’t have any choices.

The concept of ‘choices’ is an interesting one. There's story my friend Scoot Danielson was telling me this funny story about this restaurant that you can order what you need, but the guy will give you he wants. Funny story the way he tells it.  I forgot what was the restaurant he was referring to.  If you’ve been to the sushi bar Sasabune in New York, choices is not part of the menu.  The chef will decide what you eat. Use extra soy sauce at your own risk. Don’t try asking for a California roll, you will get kicked out. They are ‘sushi bullies’; they decide what is good for you and if they want you to be eating there. Don’t you love that idea? I am sure marketers would kill to have that position.

Each sushi dictator has his own pet peeves, but there is common ground. Most do not allow sushi bar patrons to order off the menu. Instead, diners must accept whatever the chef gives them, a tradition known as "omakase" -- a Japanese expression that can be loosely translated as "trust the chef." They reserve special enmity for spicy tuna rolls -- typically made with scraps of raw tuna, mayonnaise and chili powder were only invented so that restaurants could mask the taste of substandard fish.  Don’t ask for California roll, it is an US invention. The chef decides what his customers eat and doles out soy sauce by the droplet. Patrons who rudely demand miso soup and extra rice are often shown the door. It is estimated that they eject a customer or two per month simply because they take too long to eat.

The question is are we given enough choices as consumers? I think answer is not about "choices"; it is about truly differentiated options that are meaningful to consumer. By merely providing more choices based on undifferentiated options is turning customer off. We said we wanted choices. Now carriers are offering plans that no one can understand (unless you have PhD in mathematics). Check out the number of cell phones available out there? Check the type of accounts available from your banks? Same for toothpaste, detergent, motor oil, shampoo, sneakers and digital cameras etc. Marketers have only one strategy, it is to confuse us.

Wireless is the best example. We don't need more devices, services or applications. Most wireless shoppers are not even aware of available services.  They may ask for some key features such as GPS etc. They are not aware of most other options. For many products, more is less. Overwhelming choice paralyzes people into indecision. Marketing dollars are wasted to educate consumers. The strategy is to do less (do right) than your competitors to beat them.  Let them overshoot and you bring to your customers a few simple solutions that help them solve their problems. It's just that simple.

Everyone Can Be Creative With Google Maps. I Like The Idea Of Google Earth Dating Or Google Earth Food.

One great thing about many Web 2.0 applications is that it empowers people to do creative things. Google map is the best example. I was playing the idea of mobile dating (Location Based Enabled) three years back and LBS was limited then. Keith and I was playing with the idea and I think there are still plenty of opportunities there, Imagine walking into a restaurant and be able to see these color dots showing up on your iPhone. Order a Martini and start checking these people profiles. I'd love the idea.

That's kind of what. HookupMaps is doing, it is a service that shows you exactly where the people wanting to "hook up" in your city are whether you are in NY, San Francisco or Miami. For instance, in NYC, I can tell you that in my friendly hood of the Anthos (36W 52nd), there are currently 328 people seeking people. It will also tell you the age and gender of each poster. This is a very cool idea for those who are looking or just window shopping. I can e this application can evolve. No question this will prove to be popular. I think of a 10 ways to make money with this. Not sure they have a business model yet. I also like to see their current mood and how much time these people want to kill etc. There's just no shortage of fun ideas.

Can Yahoo! Still Be Saved? Can Yahoo Transform Itself Out Of This Crisis? Can Jerry Last Another 90 Days?

What is Yahoo? There’s always the big strategy question “What do you want to be when you grow up?”  Is Yahoo a technology company?  Or a media company? Yahoo choose to become a media company. Semel was hired (and fired) for brining the company closer to becoming a media company. Yahoo came to fame as an innovation company (both technology and user experience) and when a media man took over, technology and innovation was put in the back. Yahoo is one of the pioneer innovators that transform and reinvent media (new media). Semel is a classic media executive and didn’t get the transformative nature of the business.

Under Semel, Yahoo was getting better and better at selling media space and impressions, and even tried to create content, while other nimble start-ups were getting better at innovation. They were late in the game in the big social networking and micro-blogging etc. This is not about what they do but about who they are. Yahoo at heart should be a technology and innovation company, that brings them closer to Google. The transformation to a media company was destroying Yahoo’s innovation culture and those bright engineers didn’t think Yahoo was the right place for them. Yahoo needed to be  a place where the next big thing should happen and they can make a difference. They don’t want to work in Hollywood, they want Silicon Valley. They want to create the next whatever platform. They need to pick a core competence, content creation or software innovation? Difficult to have both.

The reason that Google is unstoppable is that they are good at taking complicated technology - and build an uncomplicated business around it: selling advertising aimed at consumers based on Google’s understanding of their needs and wants, gleaned from their search patterns.  And Yahoo? They are content providers, content distributors and technology innovators and trying to excel at al three.  Here’s Jerry Yang’s memo to all Yahoos  today. There isn't anything that help Yahoos to see the future. It is a pretty depressing memo.

yahoos,

i feel it’s important for me to reach out to you after our earnings announcement, and before our all hands meeting tomorrow.

we as a company have been through a tremendously challenging year; and managing the increasingly turbulent global advertising climate has been an important focus for the last three months.

throughout the first three quarters of 2008, we have been balancing between investing in our top priorities, and managing our cost structure. beginning in september, with the help of Bain & Co., we initiated a series of steps to determine how we can become more efficient and productive as an organization.

we heard from you through the YEES survey, and through your suggestions on backyard, and we’ve identified many areas that we all feel we can improve upon. our productivity efforts, based in part on what we heard from you, will involve initiatives such as streamlining our organizational structure through reducing layers and increasing spans of control, and eliminating redundancies. longer term structural efficiencies include consolidating facilities, improving procurement, and standardizing our global technology platforms.

today as part of our q3 earnings release, we said that our goal is to reduce our current annualized cost run rate of roughly $3.9 billion by more than $400 million before the end of 2008. we are targeting non-headcount expenses wherever possible, such as facilities and outside services. however, because compensation expenses are the single largest part of our costs, we anticipate a reduction of at least 10% of our global workforce by year-end.

affected employees will be notified of layoffs in the next several weeks. we understand that hearing this news now creates uncertainty, but we are moving ahead in a way that balances speed with a clear focus on accomplishing what is necessary to set the organization up for long term success. going forward it will continue to be important for us to make the right decisions to keep our business efficient and strong.

having layoffs is very difficult, particularly in light of all we’ve experienced this year. but we don’t take these decisions lightly, and are committed to treating affected employees fairly, offering severance and outplacement services.

the steps we are taking are not easy for us as a company, but as we become more fit as an organization, decision-making will be faster and it will be easier for us all to get more done and stay focused on our strategy. these changes will also prepare us to better deal with the macroeconomic downturn. as with previous downturns, yahoo! continues to be a place where consumers turn for information and communications, and is an integral part of their internet day. as the global economy improves in the future, i certainly believe that we will be stronger and benefit from the actions we are taking now.

as always, i thank you for all you do as yahoos.

best,

jerry

Jerry is a super bright mind, that’s not a question. I don’t think he can provide the leadership (business and strategy) to transform Yahoo out of this crisis. Organizations evolve and change, reacting to new disruptive technologies and new user behaviors.  In a large company like Yahoo, these shifts go on more or less unnoticed. But sometimes a company must change more quickly than this gradual evolution allows; it needs a break with the past, an accelerated pace of change—a transformation. I called this Escape Velocity – a term I use to describe how companies need to defy gravity.

Times like this place a lot of burden on CEOs.  It is the leaders of companies in crisis who may be best placed to achieve a true transformation. Interestingly enough by contrast, most transformations undertaken in non-crisis conditions end up failing: employees’ attitudes and behavior remain unchanged, ambitious targets slip downward, and the program is finally abandoned, leaving the company worse off than it was before.

Jerry faces a daunting challenge: nothing less than creating a new corporate reality that changes the way employees, customers, and investors perceive the company.  With the Microsoft deal in the air, the cloud of uncertainly is not helping. I predict he will be moving on in 3 months. Yahoo will go back to search, but this time it is for a new CEO and a buyer.

The transformation of Yahoo requires tens of thousand of employees to adopt a new view of its future, a future they must regard as essential. Before employees can arrive at this deep conviction, three things must be absolutely clear to them – What is it for them?  What is the 'new game' we are trying to play?  How can we win this game? Our experience shows that the best way to ensure transformation success is for senior leadership to establish the context and overarching goals of change, and then to create opportunities where employees can translate these goals into action. In essence, the leadership task is to translate the company's vision of a new game (that is, its transformation objectives) into simple, contextual goals. These goals provide the frame within which people can take ownership of the actual transformation of processes, ways of working, and even the creation of new processes and activities. Yahoo's future is in the hands of the thousands of smart Yahoos, not Yang.

Innovation Comes In All Sizes. It Is Often The Result Of Combining Two Or More Ideas To Create A Third One.

Innovation, in today’s chaotic business environment has emerged as the primal strategy for driving faster growth, increasing revenue share and even survival! It is increasingly becoming a fundamental factor helping companies cope with disruptive technologies, short product lifetimes, super low cost competition, the need to replace products sooner and the ammunition to face new competition.  Innovation is simply not about inventing, re-inventing and churning out new ideas. And, it doesn’t just create new products or services. It unlocks hidden value in existing ones – thereby reinvigorating a business without completely reinventing it. It is a disciplined process by which an idea is generated that result in significant economic value creation and improved customer experience.

Innovations are based on combining ideas in creative new ways by design or accidents or both.  Forbes magazine came up with an interactive list of the top 85 innovations that changed the way we live and do business and on that list it includes frozen food as the top innovation of 1924, appropriately followed by the microwave in 1947 and the first electronic digital computer in 1942 and, of course, Pong in 1972. These are no questions big invention as well as big innovations that change our lives. Companies are always for big innovations that include earth shattering new products that will leave the competition in the dust.  It is east for them to overlook small innovations, which bring incremental additional income or – more likely – result in relatively small but nevertheless significant cost savings.

Toyota is a good example of an organization bringing not only big but also  small continuous innovation to their products. Many of Toyota's innovations are small and are often about improving the efficiency of their just-in-time logistics. But the results have been very big: Toyota is consistently one of the most – if not the most – profitable car companies in the world year after year.
Whether it is big or small innovation, it is often the result of combining two or more ideas to make a third then two plus two can equal five. In the ancient world one of the great discoveries was that by combining two soft metals, iron and tin, you could create a strong alloy, bronze. In a similar way combining two minor inventions, the coin punch and the wine press, gave birth to the mighty printing press. It is kind of a cook making fusion dishes. The difference here is deciding ‘what’ to combine and the ‘how’ too.

Celebdaq is a weird combination that worked for the BBC is their celebrity stock exchange,. On this site you can take a future option on the media coverage for your chosen celebrity and then watch your option rise or fall in value. By marrying Hello magazine and financial spread betting the BBC has created a radical innovation that is proving very popular.

Nearly every new idea is a synthesis of other ideas. So a great way to generate ideas is to force combination possibilities. Get your team together and let them play with mesh-ups from wildly different sources. Take it to the extreme. How could you combine your key concept with random products, services, places, personalities, etc? The more bizarre the combination the more original the ideas that are triggered. Innovation needs random sources of inspiration, anything from watching people to strange noises from your air conditioner.

Here's one innovation story. Viennese composer Frank Schubert often found musical inspiration in his coffee grinder. The chaotic pitches and rhythms it made often suggested themes to him. He'd find himself grinding coffee, hear something "original" and go straight to the piano to hunt for the notes and phrases that sounded like the patterns the grinder just made. This kind of hearing is akin to what psychologists call "clang association."  So net time if you neighbor is making lots of noises, you can start seeing (hearing) them as sources of innovation!

Want To Hear One Of The Most Innovative Ideas That I've Come Across In 10 Years?

Here's photo of us with our Fendshui consultant Paul Ng, he was working with our interior designer to maximize positive energy flow in our creative space. His analsyis was this new place is perfect for innovation. Nice to hear that since we've just signed a 5 year lease. A little bit of optiization work is needed, a waterfall or any other water scene on one of the walls on the East side of your office. This is more of standard practice. You can do that if you have a compass.

Innovation requires a new type of leadership. Innovation often needs to deal with a lot of unknowns and to go against industry dogmas. Innovation requires leaders that aspire, mobilize, envision and dream. Innovation leaders chase big dreams. Apple pictured music-on-the-go with a totally new experience; Wal-Mart envisioned affordability for the masses. Each started with a bold idea that goes again industry assumptions. Each declaration came from a leader (Steve Jobs, Sam Walton) who was committed to following through. Innovation goes hand in hand with leadership.

Here’s an innovation idea that I think is bold, creative and potentially highly impactful. I was fascinated to read about Simon Berry's  (CEO of Ruralnet in the UK) idea suggesting using Coca Cola’s distribution capabilities in developing countries to distribute rehydration salts? Maybe by dedicating one compartment in every 10 crates as 'the life saving' compartment? This is truly a truly innovative idea leveraing commercial infrastrucure for public good. There's no better way to build a great brand.

For 10 years, Simon worked all over the world as part of the British aid effort. He thinks there is a simple way to help the one in five children in Africa who die from simple causes - usually diarrhoea. He first had this idea 20 years ago while working in NE Zambia where 1 in 5 children die before the age of 5 from dehydration caused by diarrhoea - a situation happening then which is still happening now. At that time he talked to various people about the idea but it failed to gain traction.

Simon was inspired by the CEO's conference hosted by Gordon Brown to blog his idea on June this year. He then repeatedly contacted Coca Cola but was having no impact. He tried to get his idea debated on Radio 4's iPM program without success. So, on Sunday, 18/5/08, Simon decided to set up a Facebook group which grew rapidly and he re-started lobbying iPM. This time a feature was run, Eve Graham (The New Seekers) sang new words to 'Let's Teach The World To Sing' and the BBC got a response from Coca Cola, who finally agreed to talk. A lot of effort to just t get to this stage. Double bottom line is still foreign to many unfortunately.

In just 2 weeks, the Facebook group grew 1,400 strong and is now growing very quickly. It includes members from most countries in the world. Membership includes a frontline organization that has been working in rehydration for 20 years.  No question this is the one of the most innovative idea that I’ve came across in my 25 years strategy and innovation career. There are two lessons about this story. First is the power of a big idea and the other is the power of social media.

Here are one interesting innovation from a Korean designer Jaebeom Jeong in a project called Cartrider. Definitely a nice re-mix of an old design. Enjoy the weekend.

Design As A Governing Force, A Voice That Guides Shape And Form Factor, With The Goal To Making “One Great Thing Instead of A Collection Of Many Little Things.

Why are there so many products that do not look good or anything but easy to use?  I am guessing that over 80% of products out there are the outcome of "Frankensteinzation". Part of the reason is the engineer voice is dominating the design process. Design represents the voice of the user. Design is never part of the engineering school culture although design is an inherently part of engineering. It is generally not regarded as a primary course of study in engineering school. Why is that?  Engineering is about science, and science represents a systematic study of the natural world that characterizes and quantifies the physical attributes of matter and phenomena. It getting to the truth, it is basically a reduction process and things are separated into cause and effect that heavily anchored in a Newtonian world. Design is the exact opposite. In the engineering world, design is less about aesthetic enhancement and more a feature of problem solving and logical analysis.  Features and functionality comes before the form factor.

Buckminster Fuller (famous inventor, architect, engineer, mathematician and cosmologist. Twice dismissed from Harvard, Fuller never received a formal degree and had no academic credentials, he received 44 honorary doctoral degrees) talked about this as, “The consumption and digestion of facts and statistics is somewhat like eating and chewing hay and thistles. There is nourishment in them in their raw state, to be sure, but a cow is needed to convert them into milk.”

Engineering’s intimate ties to science and its penchant for practicality have left it vulnerable to compartmentalized thinking.  Business is having the same problem as the core teaching in business schools is anchored on finance and economics. Usability school is somewhere in the middle but more towards the engineering school's side. In D-school, design is the central pillar on which artistic expression is built around. Design is a governing force, a voice that guides shape, form factor, making “one great thing instead of a collection of little things. They are two different worlds. Design seeks to harmonize, unite, and simplify representing a different mind-set from science-based culture. Design exists beyond the boundaries of look and feel, on a cognitive level, meaning is perceived in the non-verbal realm of emotion and intuition. Good designs build great brands.

The success of Danish design is a good example. The Danish twist on things involves a simplification, but without making things vulgar or cold. While Bauhaus school used steel to express simplicity, the major figures of the Golden Age drew upon Denmark's strong carpentry tradition to make comfortable furniture for people stuck inside for much of the year. Danish design is recognized for- user-friendliness and comfortable forms; many products today take cues from Danish design by combining an aesthetic shell with functionality.

Fuller had some great insight into the mechanics of invention. Working at a time when the modernist ideal was driving new paradigms in science and art, Fuller put forth an equation: Science + Art + Industry = Universal Architecture. Fuller revealed in this theorem that in combination reason, intuition, and purpose have a synergistic relationship. In this instance, architecture was not a feature of the built environment or a stylistic proposition; it was rather a description of universal order. Designers and engineers can benefit a lot from Fuller's ideas.

Part Of Design Is About Helping Business People To Imagine; Persuading Extended Team To Buy And Getting Insiders To Believe That It Will Work.

Where do you learn experience design and interactive design? Are the D-schools doing a good job producing design thinkers? What about cross-disciplinary designs?  How expensive are D-schools? I've been asked questions like these all the time.

How much does D-school costs? A two-year master's degree program would run from $27,500 to $75,000.  Not much cheaper than MBAs (average cost is $40,000 for a year or $80,000 for two years. HBS costs $43,800 for tuition alone $75,000 everything for the two years). The Rhode Island School of Designs’ tuition is $66,250 for a two-year program. MFA degrees can be more affordable with state universities roughly $6,500 for state residents and $18,000 for nonresidents, making it $19,000 -$55,000 for its three-year program. Royal College Arts MA program's tuition fee for UK and EU students is £4,780 and for overseas students is £22,850 a year. D-schools need to serve two masters: student and industry. The field of design has become so broad that schools struggle to provide enough coverage and technology culture is making D-school play catch-up.

Design historically concerned itself with objects and visuals, today's designers are routinely asked to participate in innovation projects, new product strategies, interactions, and experiences. The question is are design programs teaching enough of the skills that designers really need to design for the future?

There are four components in design – investigating (understanding needs), dreaming (seeing unmet needs), visualizing and defining. The visualization part includes verbal, written and visual communication. Software is becoming a let part of the design process and students are learning to master these new tools. These are expensive tools compare to the days of pen and paper. You really can’t design interactions with pen and paper.

Who offers the best interactive design programs? I am not sure. I know Pratt in NY has a good program.  In London there are Central St Martins College of Art and Design, Ravensbourne College of Design and the Royal College of Art. The London College of Communication has a BA Honors Graphic and Media Design – Design for Interaction and Moving Image, and an MA Postgraduate Diploma Interactive Media. I believe the Royal College of Art that offers the best in interaction design, with its Design Interactions MA.

The MA Communication Design at Central St Martins College of Art and Design has an interesting slant on digital media that has focused on exploring technology as useful communication, note "useful". One graduate’s project "The Way Out" was typical, mapping London Tube station exits. Travelers can use their Way Out application on their iPod to calculate which carriage to take that is closest to the exit at any destination. It is pretty cool. Central St Martins is nurturing new competencies in information design, on top of a strong print heritage.

The Master in I-Design from Domus Academy in Milan is an interesting one. It was born from a unique challenge: bring the originality of Italian Design Culture into the world of information technology. The Master in I-Design is the natural evolution of a series of educational and research initiatives developed by Domus Academy since 1983 on the theme of technological innovation and the design of immaterial relations with interactive objects and services. The Master in I-Design is integrated to a permanent laboratory on the subject of digital information based on design culture, which centers on the idea of design as knowledge of changing world and as a way of learning while designing. I-Design is closely related to the themes of information and interactive. This is definitely a good option for those who are considering a design career. I plan to visit this school next time I am in Milan.

What's Apple's Future Beyond iPod? Apple's Strategy Is To Win At The Top As Well As The Bottom.

 A crazy week finally coming to an end. Good things happened this week, signed the lease of another floor of beautiful office space and interior work begins today. Will take at least 5-6 weeks before the Herman Miller chairs arrive from Michigan and the Barcelona chairs and other furniture arrive from Milan. It is a great space and we're lucky as this space was only listed in the market last week. We will have lots of space for collaborating. Innovation is about attacking the white space, literally we will be creating lots of white space for innovation. I think this additional office will end up looking like an Apple Store.

Talking about Apple, I remember my first Sony Walkman, it was 1970 and I don’t remember when it officially ceased production when replaced by portable CD player. I think around 1985 so we are talking about a 15 years product lifecycle. I think in year 6 the Walkman eventually being fully commoditized and the market was flooded with low cost and differentiated players. They are still leveraging the Walkman name, Here’s the good part, when they launched its line of smallest flash-based music player in 2003, the players used Sony's proprietary ATRAC format and won’t play MP3 format. So it is an MP3 player that doesn’t play MP3. They were available in a number of capacities, up to 1 GB and that’s pretty impressive. The first of these Walkmans was the NW-MS70D which had an impressive capacity of 256 MB. They were not bad products, but totally out of touch with the digital culture. What about iPod? No question it will eventually fade away like other great innovations, but when will that happen?

On Oct 23, 2001, Steve Jobs announced that “listening to music will never be the same again,” and that marked the big comeback of Apple. Apple may not have invented the digital music player but it did turn the MP3 player into a popular culture phenomenon. The first iPod holds 5Gb of music – about 1,000 songs and costs $500 (or £349). I remember a story about how a tech guy posted a story in 2005 about how he proposed to his girlfriend via iPod. He bought his girl an iPod Nano with his proposal engraved on the back - the best part of the story? She said yes.

This is year 7 since the first iPod launch, Apple will still continue to sell millions of units every quarter, at least they will sustain good unit sales and revenue growth for a while. But the company is seeing the end of this product platform and the strategy would be to milk this for 3 (or 4 max) more years. Don’t expect any major innovation for the iPod. The iTouch is probably the last big change.

The iPhone will take over as the focus and expect Apple to come up with different models, IPhone Nano or iPhone Business or iPhone Air? Convergence would force multi-function devices to specialize and the iPhone is in its second year of a 5-6 year of innovation cycle. Apple will leverage their technological innovation and ride the cost curves in the next 24 months to bring a new level of value to customer. Apple will not solely compete on the high end but also the lower middle market. Let me make a prediction. Expect a $750 MacBook in 18 months (there's rumor about a $800 Macbook but I don't think that will happen, Apple has not reason to push that under $1,000), a $150 iPhone and free iPod (or subsidized), just subscribe to iTunes on a monthly basis.

The other growth platform would be movie download, existing Apple owners are twice as likely as others to use an online movie download service that extends to the home TV. If Apple TV drops below $200, the demand will jump and push sales above $10mm.

I think the iPhone will become the smart controller of home entertainment including music on your computer or Apple TV and control playback from anywhere in and around your home. Or even as remote control for your coffe maker. Here's one new application for the iPhone. How about iDating?

Product Innovation With A Political Taste

This is going to be a short post today. Kept super busy with administrative sfuff which I sometimes wonder why am I doing this. I should be making powerful power points to transform business and change the world. 

Battle Creek, Michigan, home to Kellogg’s cereal brand, hosted candidates Barack Obama and Joe Biden at a rally last month, where Democratic candidate for congress, Mark Schauer showed off this special edition Frosted Flakes box to the crowd. This is a limited edition as only two were produced. May be Kellog will produced one after the election. 

 

But if you really like Presidential Candidate breakfast, you can visit AirBed&Breakfast">, book some cheap hotel and start each day of your "better than a cheap hotel" stay with a bowl of Presidential Candidate breakfast. Just in case you don’t get enough of them, you can go their site and vote for your favorite cereal and even order your very own limited edition box for $39 and 5% of sale will go to respective campaigns. Expect to see Palin’s lipsticks and eye-glasses, scary isn’t it? We're a few weeks away from Halloween.  It is scary hearing politicians talking about how to turn the economy around makes me wonder why we are in this mess in the first place. They really don't understand how the economy work.... guess they didn't study in school.

The media should stop overplaying these bad news in a repetitive fashion. We don't need them to tell us how bad itis. Do something. Bring in new ideas. innovate our way out of this mess. Here's a god idea. Choosy chocoholics now have a heavenly treat to soothe the inner brow as the price of their house falls off a cliff - the "Credit Crunch". Hokey Pokey honeycomb pieces drenched in chocolate from French company Valrhona are selling very well at Selfridges for price of just £3.99 for 150g.  The project was launched by The Chocolate Society (want to be a member of that.. sounds very cool) and food writer Laura Santini to tempt jaded shoppers amid a diet of news dominated by economic woes. Said Ewan Venters, Selfridges' director of food and restaurants: "Although people might be looking to spend a little less at the moment, they still want to treat themselves to the best. "Quality chocolate is the ultimate solution, being relatively inexpensive, instantly satisfying and really helps lift your mood. We expect our new Credit Crunch to be a big seller."

One big idea is this economic climate is to provide affordable indulgences, the chocolate is a great example. There are tons of innovation that can help companies build loyalty and market share. There is never a better time to test innovation in marketing. Because you are forced to innovate. We have lots of these ideas to throw around.

Happy 20th Birthday Power Point! What Do You Want To Become When You Grow Up?

Power Point is probably the most important business tool for me other than email and excel. I was an early adoptor when it first came out 20 years ago (1988) and we did not have lcd projector so we printed them out on b/w transparencies. The good thing I could draw on those while presenting.  A year later someone came up with a plug in directly from video out from my Apple book (a b/w screen Apple laptop), I remembered I was first using it for a presentation for a sneaker client and I did impress the CEO. I was so happy with the toy and felt empowered because there was something magical about having all the data and secret in my laptop and slowing revealing it.

This year we celebrate the 20th birthday of Power Point. It is now the lingua franca of corporate America from boardroom to training room. I used to run Power Point workshop for my senior staff years ago and today I still carry the reputation of Power King for many years for those who worked with me in past lives. I taught them how to create substance with style and balance presentation and interactions. My personal experience 75% of all senior executives fail the Power Point test. I was teaching them skills to boost presentation effectiveness in just 2 hours.  

20 years later, I now use it a thinking tool, a mapping tool, a communication tool and even a design tool. I've used it for my 500 people keynotes and 10 people executive presentations and it serves me well. Many years ago, we (and most global consultancies) have switched out of a big word document deliverable into using power point deck. It is about data and ideas , not number of words.

One widely used estimate places the number of PowerPoint presentations at 30 million...per day. Even at half of that, that's still a heck of a lot of PowerPoint slides. There is a lot of misuse of Power Point and like many of you I cannot stand someone standing with a Power Point but with nothing to say. But we shouldn’t blame Power Point for that.  Yale's visual information guru Edward Tufte said "Power Corrupts. PowerPoint Corrupts Absolutely." That’s not quite fair.

You might not know PowerPoint was Microsoft's first major acquisition - $14m in cash and first available only on Mac. It was never designed for a wider audience than the sales people. It is a powerful enablement for those who have important data and massage to deliver, just like the printing press or phonograph, it also enable garbage to be distributed. You don’t blame RCA’s invention of the phonograph for much bad music today.

Not sure what’s the next Power Point would be like. Microsoft has been experimenting with something similar in its Office Labs program. Called pptPlex, you can use zooming to jump around to different parts of a PowerPoint presentation instead of sticking to a controlled order. I like to see it moving away from a linear path to a more dynamic way of showing different assets.

A start-up ZuiPrezi is working on a new application that bring the benefits of charting out what order you want the presentation to scroll around in, even if it's all over the map. It is an interesting interface but I am not sure about the map. The service is still in private beta although there are both preview videos and live examples of presentations to play with.  Unfortunately I was not able to play with that, from what I see you can create dynamic and visually structured zooming maps of texts, images, videos, PDFs, drawings.  I look forward to play with this tool, not that I will give up Power Point, for sentimental reasons.

Will A New Breed Of Innovation Companies Eventually Settle Into The Realm Of New Product/Service Innovation?

 

The last few years we’ve seen a growing interest on “design” and “design thinking” although we don’t see MBA school rushing to teach using “design thinking” application in business problem solving.  Design influence has not only infiltrate B-schools, it has attracted the interest of ad agencies and branding agencies. It is a marketer’s dream to have products that do not require advertising, the balance of form and function itself that consumers recognize instantly, that's will never happen of it does it is rare. Even Apple needs to advertise so adverting is not going away. Except it's very nature has changed. Marketing, in the form of logos, packaging, advertising, and the ever-broadening fuzzy activities known as branding, has attained the status of necessary evil to build brands. 

We’re seeing some branding agencies (and adv agencies) are trying to get into products, some are doing a more decent jobs than others. There are some ex-agency creative folks carrying the banner of Corporate Social Responsibility consultants and all they can think of is the obvious. I think branding firm and even ad firm (with a few exceptions) are not right for the job, the same reasons why you won’t hire your lawyer to fix your customer service problems or your accountants to fix your technology problems. Mark Read (WPP corporate) reminded me that some 20 years back ad agency (Bates) helped De Beers to come up with many of the innovation. They pretty much invented the ritual and came up with phrase 'a diamond is forever' and that people have used diamond engagement rings ever since. But when the last time we’ve seen an innovation came from an agency?
 
Can adv agencies design great products and/or experiences? You would think so? Over the years they have narrowed their skills (rather than broadening) and their core capabilities were reduced to doing the following three things 1/ finding a unique way to positioning a products within its category 2/adjustments of minutia to affect the consumers’ perception of the brand 3/ maximize repetitive exposure and extend reach. Innovation is not a core capability. Deep customer insight is not a core capability (over reliance of traditional research is the problem).  Customer engagement is not a core capability (although they refer customer engagement as engaging through a 30sec TVC). It makes you wonder whether a new breed innovation companies will eventually settle into the realm of new product innovation and brand / communication innovation or even push into the space to deliver business model innovation.

The next big issue is “authenticity”?  Today this word carries extra meanings thanks to the Internet.  This is not something one can “buy” with big ad dollars. This is truly how brand differentiates and is strongly associated with trust, not just brands but also on a corporate level. Adv agencies (including interactive and direct mkt agencies) fundamentally operate differently and are not really good candidates for innovation and design explorations.

Next year will be a particular difficult year for agencies, WPP is making smart moves to buy Taylor Nelson Sofres for £1.1 billion ($1.95 billion), in a deal that will reduce WPP's reliance on advertising revenue  ahead of an expected serious downturn. WPP is the best managed companies among all holding companies and Sir Martin Sorrell has been talking for more than a years about steering his company away from the volatile ad market into research and other marketing fields with more predictable profits. This is the first big move. And a smart one. 

Five Big Investment Ideas That Your Brokers Don't Know Or Won't Tell You.

Like many of you, I was watching the debate and got so sick and tired of hearing politicians talking about how bad this economic crisis is and how much they sympathize the average working class, but they don’t really have a single clue of how to fix it.  Sometimes I wonder how these people sit in terms of their average intelligence. Watching some of them (both US and Canada since both have upcoming elections) talk makes me wonder how these people (with very few exception) have little ideas of how policy, economics and geopolitics work. Can these people find a job if they get out of politics? 

In this investment climate, many people don’t trust money markets or bonds not to mention stocks. But money needs to put to use somewhere, expect to see people investing in alternative investments  I don't mean hedge funds). All of a sudden, some things that didn't look good now look attractive (relative terms). What I think are good alternative investments? I think three suggestions as follow (not in any particular order):

• Fine Wine
• Social Ventures
• Farming Services (Food and Energy)
  
• Alternative Mortgage Lenders
• Real Estate

Real estate is an obvious choice as home prices dropped 19.5%, according to the S&P/Case-Shiller 20-city composite home price index. This is best time for upgrade to a house if you are currently living in a condo.

Wine is a  good choice, why? Unlike stocks or bonds, you could end up having nothing (wallpaper stock certificates). Or instead you can go for Wine Investment Funds. All of a sudden, some things that didn't look profitable now do. Fine wines can make you money, there are now independent wine investment fund in the market seeking absolute returns from a professional investment in wine. They buy, hold and then sell some of the finest wines in the world in order to maximize returns. All the wine they hold is stored in a UK government bonded warehouse that means there is no duty or VAT to pay. The good part when the fund manager wants to evaluate their portfolios, they go wine tasting. With wine, the worst thing that could happen is that you drink all of it. If you know how to pick, the upside is pretty good.

Social Ventures is a good one. Expect to see these companies taking off and expect to see some early success stories. These politically active and culturally aware young entrepreneurs are pursuing socially responsible business ventures in high numbers. Gone are the days of those power hungry MBAs and we see many young people starting new companies dueling bottom lines—social and financial—and getting investors buy ins. From an investor’s perspectives, you get double return and believe me, it feels good to know that you’re investing in social ventures.

Farming (not just about growing things, it is about the eco-system of farming),  w all know they do not attract investments. Consider the periodic surges in prices for computer memory hardware. Because its price is declining over the long run - a result of new technologies and automation - innovators tend to stay away from the field, leaving it to a few large companies. One clear "big opportunity" lies in changing the relationship between food and energy. Fertilizer lets farmers raise production but is energy-intensive to make. Transporting food great distances also uses large amounts of energy. Finally, some foods are now being valued in relation to oil because of their potential use as fuel. For years, innovators have put their attention on alternative energy; they are now likely to concentrate on food production as well. It is like going back to the future, 80 years back farming was the technological frontier. Expect to see people building efficient modern farm. Someone is going to buy out these farms and design a new supply chain to meet the needs of the eat-local movement. The idea is pretty simple, food gets expensive and will attract innovation.

Mortgage, I am not saying you should buy AIG stock. Here’s an example: As storied financial institutions topple and consumers struggle to pay their mortgages, Tesco and Virgin Group’s latest innovation is the mortgage business. Yes mortgage. Britain's biggest mortgage lender, Halifax Bank of Scotland, which holds 1 in 5 mortgages in the UK, is disappearing as part of a rescue package by rival Lloyds TSB. Bradford & Bingley, another big lender to the average Brit, has collapsed, and Spanish banking group Santander has bought two British banks, Abbey and Alliance & Leicester.It is a mess.

Tesco sees this as an opportunity for a challenger brand like Tesco. hey think it is once again possible to make money out of mortgages because theye are seeing the return of more rational pricing, and that affords them the opportunity to go in." They are experiencing a big influx of new deposits since people believe supermarket is saving than banks. They are right, worst case you can grab some fruits and vegetables.

Tesco just bought the other half of Tesco Personal Finance that it didn't already own from the Royal Bank of Scotland for $1.77 billion. But Tesco shoppers probably won't be able to fill out their mortgage applications on their next visit to the grocery store. The company said it plans to offer checking accounts within 12 months while mortgages will follow "in due course."

Virgin at the same time is seeking a return to the mortgage market.  Branson announced that he is looking to launch a new Virgin mortgage product, because consumers need choice and because mortgages are a more viable business proposition than in recent years.

This weekend is a good time to rethink your investments. Share with me if you can think of another great one. 

Have a great weekend.