innovation playground Idris Mootee

Scientists Suggest That We Need More Humor And Love In A Creative Workplace, But Less Sex (Just A Little Less Perhaps).

We all know people such as Einstein and other innovative thinker are more than just creative. They are big ideas people, not only dreaming big but posses the intelligence to calculate options and apply fuzzy logic. Einstein also had a reputation of being funny. For many, he was a joker.

According to Einstein: “anyman who can drive safely while kissing a pretty girl is simply not giving the kiss the attention it deserves”. He is not a fan of multi-tasking I suppose. Here is another of my favorite quotes from him: “he true sign of intelligence is not knowledge but imagination”. He had also given us lesser known formula such as “If A equals success, then the formula A=X+Y+Z, where X is work. Y is the play and Z if keep your mouth shut.”

American physicist Richard Feynman, who was a joint recipient of the Nobel Prize in Physics in 1965, was credited with the concept and early exploration of quantum computing. He also had a very well developed sense of humor. Here is how he is described: "As well as being an inspirational lecturer, bongo player, notorious practical joker, and decipherer of Maya hieroglyphs, Richard Feynman was regarded as an eccentric and a free spirit. There are so many examples that being a joker is almost a key element of success.

Studies out of several universities have confirmed that humor is a great way of increasing creativity. The researchers had two groups of people complete an idea generation task. The first group listened to comedian tape before completing the test, while the other group performed the test with no pre-test activity. You know what the results looked like.

Jens Foster and his colleagues at the University of Amsterdam recently researched the concept of "sex and creativity." They are interested in the idea of thinking about being in love and thinking about sex would improve people’s creativity. Won’t bore you with the research mechanics, the net results are people who thought about love performed significantly better than those who thought about sex.

The researchers explain that “love’ triggers “global’ or holistic” thinking. The thought of sex limited the thinking to “local” processing that leads to more analytical thinking. OK Now I understand why many senior SEC folks were reportedly surfing porn in the middle of the financial crisis, it helps them to improve their analytical capability.

Jens and his colleagues specifically suggested that love makes us think long term while sex is a very short term thing. Like any business strategy planning, it needs to take care of both long terms and short terms needs. So you need both love and sex.

So why company HR policies like to discourage workplace romance? If it is supposed to be a super creative place, it can always use more love.

Brand Naming - Does The Old Rules Still Apply?

I took this picture a few weeks ago in NYC while visiting a client. I really like the name "Permission To Ger Dirty". Guess what? It is laundry store. I am not 100% sure but will send someone to check it out.

Brand naming – does the old rules still apply? Or brand naming strategists need to learn some new tricks? There are always two schools: one is find something that is cool, aspirational and doesn’t have to mean anything. Like FlickR, Google or Blackberry; or something that is relevant to a category or reflect what the product actually is such as PayPal, Facebook or Playstation etc.

Finding words that are actionable, be remembered easily, ownable, and relevant becomes a lot easier when you start playing with names that describe the product or what it does. Both approaches are not mutually exclusive. It gets complicated when you start bringing in strategic intent and corporate strategy into considerations, that it becomes branding for future business scope/scale versus branding for toady’s products and services.

Generally the same criteria applies, the ability to differentiate, the shelf life of the name, phonetics, domain name, and trademark issues. One very common mistake, people believe that if the brand name cannot be owned as domain name, than they should be take off the list That should not be the limiting factor with the exception that there is a very strong presence from another web company.

We all want to be different. The question is should we rely on the brand name alone to do the job? A distinctive and easy to remember name helps distinguish the brand, the product or the business. But it needs to be supported by delivery of the brand promise and brand economics. Certain brand names stay in our mind even long after the businesses went under. What good is that?  Brand naming is important for sure, but the more important thing is it needs to be strategic.

What You Don't Know About Crowdsourcing And Why They Often Fail?

Innovation is hard, it is not about getting the idea at all, it is about managing ideas. So you’ve have a few great ideas, so what? There is a lot of art and science behind moving ideas along corporate decision chain as well as managing unknowns. I remember I used to teach an in-house program for my strategists on “managing the unknowns.” These MBAs struggle with not finding enough data points and as a result stuck in the innovation process. How often these big world changing ideas came from people with MBAs?

But then there are so many ideas such as Google, Twitter, Facebook, OnStar, Kindle, Blackberry and the X-37B space plane launched this week,... that turned into innovations that change the way we work and play forever; stirred new competition and created new wealth. The future is never about the future, it is about now.

What changed our life, work and business? I will say automation, digital technologies, social media, modern medicines, jet engines, fast food, mass manufacturing, the marginal productivity theory of wages, consumerism and modernism. Many of these ideas grew in a world with fundamental economic convictions, namely the mass-production and mass-consumption of goods.

But these assumptions are fast changing. Spend a few days around the world stopping over in Shenzen, Shanghai, Mumbai and Seoul and you know what’s really happening out there. Companies are getting desperate and now reaching out to suppliers and customers for ideas. Some even go to the extreme of sourcing ideas from the everyone - the crowd.

There’s this naive belief that the crowd is smarter than individual. This is a dangerous theory. Engaging suppliers, advanced users and front-end employees are good practices, but not letting them do your job.

There is one recent book about crowdsourcing suggesting companies should stir things up. Just look at the current state of US politic, is that what you want to happen for your company?

Furthermore, let me tell you the secret of success for open innovation, this is a better word than crowsourcing. It is not the ideas, the breadth of the ideas, the quality of ideas etc. It is about building a team that believe in it and empowered to make it happen. Crowdsourcing and futurecasting are all great tools to get inspired, but they are not innovation, The most important part of innovation are the managing, mobilizing and aligning the ideas to strategic intent. At IC, we have the toolkits and processes and repeatedly appled them effectively in large organizational settings. Unfortunately that’s not something we can share here.

Another way to explain what I am trying to day -- Karim R. Lakhani, a pro at Harvard Business School, calls what most people refer to as crowdsourcing "broadcast search." A problem statement is broadcast along with associated incentives, and people with expertise apply their talent to solving the problem. I like the term virtuoso search better. Whatever term we use, let's not call it crowdsourcing and pretend that 10,000 average Joes invent better products than Steve Jobs.

The example of Cambrian House provided learnings for everyone. It was a very innovative idea. They were followed by the Kluster, CrowdSpirit, CrowdSpring, and FellowForce. Cambrian House was no question a pioneer in putting crowdsourcing to work. The company pretty much don’t exist today and the technology was sold to another company for a fraction of the original investment who now offers their technology solution as software services.

Cambrian House's CEO Michael Sikorsky reflected on Tech Crunch a few years back about lessons learned (excerpt):

Indeed, our model failed. In short: we became a destination people loved to bookmark more than they loved to actively visit (our traffic pattern was scarily VC-ish). The limiting reagent in the start-up equation is not ideas, but amazing founding teams.

A key assumption for us, which proved out NOT true: given a great idea with great community support and great market test data, we would be able to find (crowdsource) a team willing to execute it OR we could execute it ourselves. We needed amazing founding teams for each of the ideas – this is where our model fell short.

What we learned: it would have been better to back great teams with horrible ideas because most of the heavy lifting kept falling back on us, or a few select community members. A vicious cycle was created leading all of us to get more and more diffuse. Hence: the wisdom of crowds worked well in the model, but it was our participation of crowds aspect which broke down. Trying to find people willing or capable to take on the offspring (our outputs) of the CH model was hard and/or incredibly time consuming.

The Demoncratization Of The Art Of Film Making Is In The Making.

Is film making more art or more design? I guess it depends of what kind of film we are talking about. The same can be asked about furniture, fashion, product and architecture. When we talked about design in filmmaking people are quick to jump to sets, props and wardrobe. But what about the design of the film?

Filmmaking has gone from abstract to more realistic and now ultra realistic HD 3D. The first film that fully utilized modified stage effects was the German expressionism film Cabinet of Dr. Caligary (1919), created by Hermann Warm, Walter Rohrig, and Walter Reimann.  Expressionism often designed with a three-dimensional look of obvious theater borrowed wooden props by using distorted forced perspective. It is definitely more art than a film. You can disagree with me by saying they are one of the same thing. Joe Maeda has a very good definition about the two.

Early European style film design usually included an imaginary, highly constructed mood setting. It was the imagination of nature, construction of life, stylization of the truth, and an re-reinvention of everyday reality. I think filmmaking is about to be revolutionarized like the early days of filmmaking.

Today the tools are different, the languages are changing and we are dealing with a generation of very different filmmakers and audiences. Can 3D save the cinemas? May be. Will accessibility of affordable equipment powered up a generation of filmmakers? Probably yes. Using emerging technologies to prototype very different kinds of film. What does it mean by social filmmaking? Just as Adobe and Macintosh democratized graphic design, will film be next? 

DSLRs have become something known as 'combocams' with the ability to shoot both pictures and videos has blurred the lines between photography and videography. We will see the coming of the 'transformercams", bascially a modular open system that allows you assemble the right equipment for any job.

Not that these DSLRs are comparable to an Arriflex or Red, but they are inexpensive enough and the quality is pretty good. Equipment and the ability to operate these equipment used to be a barrier for still people to switch to film. You don’t easily get your hands on an Arriflex 35C to play with it. But today, you can experiment with your DSLRs and teach yourself to be a videographer. There is a common point of view that photography and videography are two very different art forms although they share many basic fundamental principles. The way a videographer moves, handles his equipment, exposes his subjects are quite different from how a photographer would handle the same situation. In a few years, people won’t talk about any differences.

Design’s Fundamental Role Is Problem Solving. So What Problems Did These Three Designs Try To Solve?

My plan for Europe did not materialize thanks to Yjafjallajokull (pronounced as ay-uh-fyat-luh-yoe-kuutl-ul), it is the the name of the Icelandic volcano. I was looking forward for two days intense innovation workshop.  This doesn’t happen often but it literally put Europe air traffic on a stand still. Think about those fresh flowers in Amsterdam? This is not helping me in terms of my work keeps piling up. Life is full of surprises.

My last post on Design Thinking drew upon a lot of discussions both here, Facebook and linkedin groups. I’ve got lot of people sending me their scores and I think people are having fun with it, but please don’t take it too seriously.

Back to design, here are a few everyday design ideas to share with you:

First one is a breakfast kit. Breakfast is the most important meal of the day for me. And this Downtown Breakfast Set aims to take care of all your breakfast needs in one elegant package. I am a breakfast person and I cannot function without it, so this works for me.

The design included a coffee maker, a milk frother and a toaster. The design is pretty nice, but there are a few human factor issues. First, where’s my juice? Where do I put my utensils? Butter? Jam? What about a cereal holder? I think they can easily expand the options. For me, I am a tea drinker. Oh, I need a magazine or newspaper holder too.

For digital cameras, you wonder what’s the next killer feature? Shockproof, waterproof, voice activated and instant upload to Flickr etc. If you are a dog lover, you will like this. Fuji Film was struggling to come up with a differentiating feature, and they were desperate or creative enough to start thinking about animals.

Their new Finepix Z700EXR features face detection for felines and canines as a major selling point. It has the world's first Auto Dog / Cat Detection function, with the ability to detect dog or cat faces, optimizing focus and exposure for pet photos. An auto-release function can also be selected to automatically shoot the photo when the pet is looking directly at the camera. The limitations are 1/Up to 10 dog or cat faces per photo 1/cannot detect pet faces in profile 3/cannot detect faces in scenes with both dogs and cats. Not sure how it will work when someone’s face and hair looks like a dog.

The third idea is full social media immersion. Now you can send someone a hug through Facebook. It was designed by Dzmitry Tsetserukou, an assistant professor at Toyohashi University of Technology; the goal is to add a new layer of feedback to online interaction, making them more real and engaging. It'd be coupled with software that could analyze a variety of electronic communication like Twitter, SMS and Facebook. It would translate the "positive text" it identifies to send you a nice squeeze through the HaptiHeart. More overt interactions, such as two avatars hugging in Second Life, would get the same response. Now you can literally get a real poke from someone through Facebook. Cool idea? What happen if you play Street Fighter with it?

The Myths About Design Thinking And How You Can Find Out If You Are Truly An Integrative Thinker. Take The Test Now. And Yes, We Are Hiring!

These days I am getting a little bothered with the phrase "design thinking". There is a lot causal misuse but the phrase has gained popularity and currency because it is new, it gives designers new status and it helps to push design firm upstream and hopefully they can solve bigger problems with design ideas. I am as guilty as many and I do like the phrase because it gives new meaning to a thinking style that are suppressed or often ignored in the boardroom or in executive meetings.

But there’s a few myths and people assume anyone who is working as a designer or received a design education is naturally a design thinker. That’s not true. It is like saying anyone who graduate from a business school with an MBA is naturally a strategic thinker. I can pretty much guarantee you that’s not true, having hired more than 500 MBAs in my career. Many strategic thinkers are non MBAs. But MBA helps.

What makes a person a design thinker? And what makes a person a strategic thinker? First myth, design is not the domain of designers. Design (beyond form and function) encompasses a broader set of influences and is (should be) part of any complex decision making process. Designing for Social Change; Designing for Business Transformation; Design for New Organization Structure; Design for Social Participation; and Design for Strategic Agility etc. Most of these are beyond the training of designers and many great traditional industrial design companies. This is not about designing a cute logo or poster or chair.

Second myth, design does NOT replace analytical analysis. It is true to say that analysis alone cannot solve some of the wicked problems that are immensely complex in nature, but without analysis we can’t even pinpoint the problems. I'll admit I am a "Deductionist" first and I am also a "Creative Artist". I probably use the logic of necessity or the logic of probability to support my day-to-day decision making more than I use my creative thinking. It is most powerful when I combine the two... and with a little artistic flair.

Unfortunately our societies (and school systems) like to lead us to think we can only be good at one. I am an example. I am good at both and I think many others are good at both without knowing it. There are many examples out there. John Maeda is one good one.

It is an education system problem, It is how we want people to think - you are a creative person or you're an engineer. I believe everyone has the potential to be good at both (and sometimes people are bad at both, that’s another discussion).

In additional to creativity and analytical thinking, there is a third component -- style and elegance. OK not all designers have style and can design in an elegant fashion. This is the third myth. I am guessing (from my past experience) that only 35% of designers have styles. The others are just design technician. And probably only 3-4% of MBAs have styles, that’s a pretty high estimate? It may even be lower.

Designing itself is an extreme activity. So is strategizing. Both tends to call on all those engaged in the process. It is contextual. It is embodied. It uses the whole person's mind and body, left and right brain, economics and empathy, hearts and minds, analysis and expressions, elegance and structure. So what are you?

Our resident scientists and anthropologists have spent months designing an application which was originally used as part of Idea Couture’s recruitment process. As you know, we pride ourselves as D.School and B.School thinkers and that's how we bring innovative solutions to clients' wicked problems. Now we decide to open it up and allow you to do the test and share the results with your friends on Facebook.

If you get very high D.School and B.School scores, you really should contact me asap. The next step of the test is a little more complex and will require some attachment of sensors to your head while we show you some power points, you don't need to know more about that for now. And if you unfortunately get very low scores on both, I suggest you get some immediate counseling.

Every Business Needs A New Operating System. Even The World Needs A New Operating System. It Is What Strategic Innovation Is All About. The Future Is Not Only Close, It Is Already Here.

In a few short months, Idea Couture will be celebrating another anniversary and some people have been here for two years and some three. It was Jackie’s second year’s anniversary last week (thank you Jackie) and it will three for Adam, Morgan and Nick pretty soon, and as we add new people every month and some are spreading across different geographies, it will be harder and harder for everyone to know everyone well. That’s just the life. And I am lucky (also by design) that we have been able to attract the brightest and the smartest. I am grateful to everyone of them who made the decision to take that journey with us.

Idea Couture were nominated as one of the most innovative companies in 2010 by our bankers and to our surprised, we only learned about the news Saturday evening – Idea Couture is now officially the most innovative company of the year, nice surprise. The funny part is, most people don’t actually know what exactly we do. What is an innovation company? That’s a damn good question.

Tom Peters’ started some 15 years ago telling executives the importance of innovation (beyond traditional technological definition) and how companies should “Strive for strangeness”: Creating a portfolio of the weird and encouraging "freaks" to flourish inside the company will help ensure the steady stream of innovative ideas necessary to survive in an hyper-competitive international business environment. I won’t go that far to use the word “freaks’, but we do have a lot of unique on-of-a kinds.

Peters was also an early advocate of the "culture of prototyping." In a world of ceaseless change, business concepts can be easily prototyped and tested, organizations have many resources at their disposal – capital, technology, channel, brand – but none are as valuable as their ability to use their own imagination and link them to customer needs, both unmet and unarticulated needs. To do that, organizations need to teach its people how to stand in different places; wear different hats and see things with a different lens. Not only during crisis, but also as part of their everyday job.

Innovation has never been part of any typical MBA (some exceptions) school curriculum; it is the opposite of many things that are taught in B-schools. Funny enough, I found a nicely-bound and very dusty copy of my thesis in my basement,it was my research during my last three month at the London Business School. My thesis supervisor was Prof Costas Markides and the title was Strategic Innovation. It never came to mind that decades later I am taking a page from my own thesis and it becomes the core of what IC does. I guess I am getting the ROI.

The problem with modern management is, in the language of systems thinking, the function of management is to eliminate “variation,” which is, broadly, the tendency of things to go off uncontrolled in all directions. Excessive variation is absolutely the enemy of predictability; indeed, the entire function of strategic planning; quality control and six sigma are focused on eliminating unwanted surprise. And innovation is the maximizing lucky surprises.

And the path to innovation is never a logical one. The fuzziness goes beyond the front end and extends into the late stage. Innovation is more than just business strategy. If you think about it today, we are in such as mess… healthcare, financial, technology, media, geopolitics, sustainability etc…. and think if innovation will be expanded to include figuring out what those problems mean to be a human being on earth at a time when every living system is declining, and the rate of decline is accelerating. What it means? Basically, civilization needs a brand new operating system(s), those quick updates won’t work any more. There are tremendous opportunities for company to rethink and reimagine their future and create new shareholder value. Innovation is connected to everything, it is not just business, but the future of mankind. And we’re running out of time.

By The Standard Of The Late Leo Burnett, Many Of Today's Big Agencies Should Have Taken Their Founders' Name Off The Door. Here's A Tribute To The Loney Man Who Spent A Lifetime Behind His Typewriter To Come With The Big Ideas.

This week I was invited to speak on branding and marketing to group graduate students who are studying towards a master degree in branding. I shared part of my Advanced Branding Masterclass material, which covers the future of branding in the world of social technologies and connectivity. Their instructor (an advertising veteran who had a long agency career including Leo Burnett) raised a very interesting point, 20 or 30 years ago advertising agencies were in the business of selling “ideas”, today many are becoming audio and video factories. And he realized that our success is all about ideas. That is very true, who are the creators of “ideas” these days? Idea Couture is exactly about ideas, not only communications but strategic ideas…. be it brand, product, service, interface, interactive, and retail experience.

We have a good chat about the agency scenes in the 80s. I always remember the self-advertising of Leo Burnett in those days. I still keep copies of them including the one I scanned and posted here.  This is one that I really like is “When to take my name off the door” – Leo Burnett 1967. It was elegantly written. He was not only a great craftsman, but understand how to create a strong organization culture. “Creative ideas flourish best in a shop which preserves some spirit of fun. Nobody is in business for fun, but that does not mean there cannot be fun in business.”A lesson I learned from him it is always important not to take the fun away from work.

A while back I was invited to a private event involving top 30 global executives of an agency group. There were so much fear and unknown among them about the future of their business or industry. They struggle with the legacies that they carry but at the same time they know they are too big to adapt flexibly to the fast changing media scene. Media is being redefined on a daily basis and brands no longer have passive, anonymous audience whose behaviors are predictable.

We are moving to "cocoon of rich media experiences that follow us from one place to another and from morning till night. The penetration of iPad will be accelerating the “cocooning” and the open up creative possibilities of building longer pauses into our entertainment mix to allow for double screening or triple-screening. Imagine if future TV production adjusted to the reality of multitasking during long boring bits. This is exciting for many.

Agencies need to throw away these out-dated paradigms of CRM, direct marketing or public relations etc. And forget about integrated campaign and start from a clean sheet of paper. Advertisers were getting MTV lazy for a long period of time as they relied on sexy bodies, sound bites and spectacular effects and forgot about the big idea. Not that those 20 secs sight and sound are not entertaining, but we need more.

Tools change, technologies advance, new behavior emerges, media outlets proliferate but objectives don’t’. We need to engage, intrigue, connect, persuade, amuse, empower and entertain. Advertising agencies need to partake in extensive therapies to cure their MTV laziness and deflate their egos. This problem is systemic.

Agencies don’t understand strategy. They keep hide behind “brand building” and fail to understand the economics of customers and marketing. They overcharge for the execution and incapable of giving clients real strategies to engage customers and create customer value, both tangible customer value and conversational value.

Almost all big agencies only pay lip service to digital and don’t understand social media beyond throwing buzz words around. For them, they are just another way to broadcast their messages. They hire and a few digital thinkers who have no real authority, no resources, no real work, and use them as PR figure in front of clients. They farm out the work to little mom and pop development shops that undervalue themselves and lose credit for the work.

Agencies need to put communications aside for a second and start opening up their minds on new creative ways to build long-lasting human connections, between brands and individuals and among individuals. Everything that matters in the future of advertising begins and ends with three things: people and their communities and purpose. Go to slideshare to see some of my slides presentation on this topic. Big agencies need help.

Don't Believe The 98% Innovaiton Failure Rate. It Is Just A Myth. Here Are My Top Five Innovation Tips.

Here's a picture of us having a welcome lunch outdoor with our new co-head of multidisciplinary design Jesse D (a Texan and Arts Center grad who has been living in Asia for many years). I first met with him in Shanghai 6 months ago and finally he landed here after 30 hours of flight time. He is still living in a suitcase for now but I am looking forward to have him participating in some of our very exciting innovation projects. Innovation needs more design mind.

Innovation is hard in many ways. What is hard about innovation? Finding new ideas is not hard. Building an innovative culture is hard. Turning ideas into product/services that people love is hard. It all begins with a piece of paper and a pencil. Innovation is hard because there are so many myths about innovation and consultants are selling snake oil. Innovation is not something that is taught in MBAs and not part of any MFA curriculum.

You can look at it from a process view, a strategy view, an organizational view and a toolkit view. Everyone’s journey is a little different and what works for one organization may not work for another. There is no one size fits all solution. Creating an innovation culture is easier said than done. There is no magic bullet for creating innovations, but there are many ways to develop a culture that encourages innovation. Developing an innovation culture takes a lot time and many companies have the will but not the time, you need to look for help externally. What will bring the organization together overnight to translate product and service initiatives into sustained results? The process one is a tricky one and here are some quick tips:

1/ Challenging Orthodoxies And Overcoming Dogmas. This is an important starting point and no good ideas will be seriously looked at without overcoming thee orthodoxies. There are orthodoxies in service such banking, healthcare and hospitality as much as in products such as CPGs, consumer electronics and personal care products. You can start with challenging your own orthodoxies or look at industry level dogmas. Think media, music, computing, beverages, travel etc. Forget the value chain for a second and start playing Lego. Challenge everything!

2/Participative Design and Co-Creation. The customer is King, Queen and Jack. Any innovation efforts will fail eventually if the end user is not driven to use your new product or service. Most consumers are intelligent and can contribute so much to the process. It is true that people can not always voice their needs and desires in a way that makes sense, but our job is find creative ways to understand their attitudes, values and behaviors and figure out how to include them in your innovation process.

3/ Innovation Sponsor And SWOT Team.  The majority of innovation teams start when a mandate from the CEO and followed by the appointment of an executive sponsor.  Without top level support, you may never get the resources needed to get things done.

Even a CEO have challenges finding the resources to invest in innovation, if there are multiple established businesses, the P&L owners of each of those businesses are going to fight for resources. The CEO often must take dollars away from yesterday’s businesses and give them to future's businesses and untested ones. That takes guts. Innovation is not for everyone. Majority of people are not ready or motivated to make innovation happen.

When putting together your innovation team, pick people from across different functions and business units, find people who have nothing to lose in their careers and willing and ready for some risks. People who have imagination and who have always been acting as the voice of the customers. Start with a small team and gradually expand to add more people. At some point, you will be ready to make this an organizational-wide undertaking and ready to harness the collective creative energy of people from all parts of the organization.

4/ Demonstrate Progress Often And Show Them The Prizes. Any innovation efforts cannot be done in a black box, these activities should be tracked and measured. The quality and quantity of foresights and insights, the number of unique idea contributors, the total number of ideas generated and total number of ideas that have been prototyped etc. And when you do get a big or small win, make sure you communicate them across the company. Innovation needs publicity.

5/ Defy The 98% Failure Rate Myth. A client of mine once told me that their success rate of innovation was 90%. I immediately felt off the chair and responded that it was probably because there weren’t any real innovation at all. People in the room laughed as I explained that they were most likely talking about some incremental improvements and called them innovation. On the other side, when people say their failure rate is 98%, I would think that they're simply not doing it right and probably lack a systemic approach of scanning, visualizing, imagining and early commercialization of ideas. If you do it right, your failure should fall below 70%. Yes, failure is part of any innovation process, but improving the chances of success is also part of an innovation strategy.

Are Large Businesses Becoming Too Complex To Be Managed And Their Business Models Are Hard To Understand? Or This Is Where The Real Competitive Advantage Lies?

My friend Mark Ury sent me a link to a piece on "The Collapse of Complex Business Models". I couldn't help but put my thoughts on the next post. There are so many myths about business strategy and business models. People used these words casually.

What is a strategy? Difficult question indeed and often a business strategy is very complex. Sometimes they are very simple, the business strategy for Walmart is buy cheap and sell cheap and create market power based on scale and probably the most advanced supply chain information systems (and the lowest possible operational cost structure). The business strategies for Google, Sony or GE or Apple (with the exception of Jobs himself) are complex indeed and even senior executive inside the company may not be able to articulate them in 15 minutes.

Strategy is so closely linked to strategic foresight. The question of how much visibility one can have into the future and how different futures can have impact on business models. It is a matter of foresight horizon, that is how far ahead, and how much disruptions are showing up under the radar. And how much complexity an organization's system can handle. When the very structure of the firm's world is undergoing rapid change, and interpretations about company business strategies and firm boundaries are characterized by ever increasing ambiguity, in that case the foresight horizon can be very complex.

I believe that strategy in the face of accelerated change and complexity should mean organization learning the on-going new practices of strategic foresighting, it is the scanning, interpreting, sensing and constructing the relationships that comprise the universe in which the firm acts or reacts. The many different parts of an organization that foster generative relationships within and across their boundaries - relationships that create new sources of value that need active re-imagination and re-configuration.

Business models are usually not the sole source of competitive advantage and value because of the reason that they can easily be copied, and many believe that is should be kept secret. But is is almost impossible since employees, financial market analysts and business partners need to understand the business models. In the modern information age where business activities are becoming more transparent, it is naive to think that you can run an effective business where only the top executive team can have a deep understanding of the business, or where partners or suppliers “don’t need to understand what we do”. No one can keep a company’s business model secret for long if at all.

People talk about how business strategy is so complex these days and most strategies are difficult to understand and or to manage from a risk and operations perspective. Often it is these complex ecosystems hold value and make it hard to be replicated. Strategic competitive advantage is created by the combination of strategy, culture, systems, brands, products and services and the by the people that operate throughout the organization. This creates a complex ecosystem that extends beyond the boundaries of the boardroom and indeed the business units.

Manly large organizations are so complex that it is hard to fully understand what’s going on, particular if you take a system view. They are almost on autopilot.  These big enterprise software systems that interacts with specialist systems that form the central nervous system of an organization. There is a problem when software behaves in unintended fashion when they get too big and there are too many. There will be unpredictable system behaviors when something is triggered and creating the ripple effects. Whether software is blame for Toyota's recent crisis or not, but it did raise a critical question: is software complexity out of control and what toll will its inherent bug exposure exact when millions of lines turn into billions or tens of billions.

Or the question goes beyond software and larger enterprises decision making process, everything today is too complex. There's a good piece written in the Boston Globe arguing that some systems, like some businesses, are too complex to be allowed to fail--and therefore this complexity should be averted or abolished in some way by regulators. The idea, in a sense, is that dangerously complex systems are too complex to exist. And bigness is an implicit culprit.

Some talked about the collapse of complex business models, there is a philosophical argument from an investor point of view whether it is better to invest in companies whose business models are easy to understand versus those that are overly complex. Complexity can also be an advantage and often a very big one. Companies that are successful in leveraging advantageous complexity and eliminating disruptive complexity in their business strategy can enjoy a sustainable competitive advantage over others. In fact, research shows that there is a direct correlation between the successful management of complex business operations and overall company performance and return on capital.