innovation playground Idris Mootee

Leadership Without Consensus Is Great Leadership. Great Leadership Means Deciding On What Is Best For the Company. And Sticking With It.

Many times when people walk out of a meeting and look happy it is because they have achieved consensus and can now move forward. I always question if this is a sign of a good outcome or not. While having everyone on the same page and sharing the same vision is without question a good thing. But arriving on a strategic decision based on consensus may not.

So they say a good team worker knows how to get consensus. It is an overly simplistic way of management decisions making. The best teamwork and team leadership is not about getting quick consensus. 99% of the time consensus making is a time wasting exercise (much like those UN meetings) and is a false ideal that many young managers are trying to follow.

Consensus means using the lowest common denominator and is a sure way to achieve under-performance and mediocrity. More, it means poor leadership - you just reduced your leadership capacity to a facilitator and avoided doing the job that you're supposed to do - make decisions that you are capable of and justifiable.

It has been said that true consensus involves "meeting everyone’s or those with the needs." Consensus decision-making is intended to de-emphasize the role of factions and get stakeholders to arrive at a common acceptable solution. Because it seeks to minimize objection, it is great for large organizations so no one will be taking the full responsibility in the event of a bad outcome.

The goal for a CEO is never to seek an OK or acceptable solution for the organization. His/her job is not to please everyone. The job is to make the right decision considering all risks factors and possibilities. Consensus involves debate. It is fine to debate; it is fine to allow people to have a voice; it is also fine to ignore many of these requests; and it is fine to ignore them when there is no logic to support it. Today, if you wait for every last person to agree and add in their feedback, you competition will eat you. Or your great idea will be diluted into some incremental thing that takes 3 years to fully implement.

Consensus often means the status quo. It means not taking the threat lightly and deciding to stay the course, which is human nature. So, when people get together to discuss the possibility of doing something radically innovative, expect 80% of people will vote for avoiding making such changes. Those who push for the status quo will always gain better support because it is easily to show data to support it. Consensus brings people back to the middle where the majority approves but mediocrity reigns.

Consensus often means leaving unresolved conflict or issues and pretending it would go away. Consensus prevents tough conversations from happening and so one will upset anyone so the meeting can end quickly. It helps avoid facing the reality. Then they will talk after meeting. Consensus means forget the idea go big or go home. No one will bet their career on any crazy idea even though deep down in their hearts they like the idea. They are just managerially uncomfortable or incapable of making those bold decisions. They are trained for the opposite.

Good leadership is to make tough decisions and trade offs. Leadership is to know where a company is heading and make decisions that lead to the best results. Good leadership is not wasting too much time to get consensus. Good leadership is making a strategic decision and committing to it.

Even If You See The End Is Coming. You Still Need A Strategy Out. It Is The Time To Think New Game.

Almost all companies at some point face some serious crisis. Sometimes it is clear that the end is near or coming and no can see the light at the end of the tunnel, at least not until you see it. Sometimes you know there is a way out but not sure how.Facing with disruptive changes driven by innovative technologies or shifting regulations, it is clear that the strategy is no longer working. You see the demand of your products is disappearing or new business models or low cost payers are eating your lunch. What do you do?

There is often a short window of opportunity to do something radically different; it has to be drastically different. Any incremental change or window dressing will push you closer to the end. If there’s a chance (there are always chances) of saving the company, make sure your executive team is focusing on three things. Read on.

For decades, I have been studying, observing, advising, and directing companies globally on their journeys to find growth, reignite growth, avoid decline, avoid death and reinvent themselves. Here are the three things you must pay attention to:

The first one is stop and think. Don't push the panic button. Go on a short vacation (go somewhere far) and find some time away from the madness and clear your mind. Think how to steer your organization’s course away from the one that got you into this mess in the first place. Don’t madly run around rearranging the decks chairs on a sinking ship. Find the source of problem and stop the leaking. Avoid hanging to the past, board of directors have different views and industry lifecycles are showing something different. The one thing for sure is what was working in the beginning would not work today and in times of uncertainty people go back to the past and hang on to something that once worked well.

Think what strategy will leapfrog you into the future. What business model options are there and what behavior will impact customer preference in the future. You need to think ahead more. Executive focus on rather short-term horizons due to public pressure in the case of public companies and forget about how important it is to create the future. They assume the same formula that gets them there in the first place can get them there to the future. Or they focus on internal politics and as a result cause inactions. The organizations are operating on old mental models and not recognizing that their business models have expired. They failed to reinvent their core and yet they have no clue on to how to invent the future. There are endless debates and power points but no action to invent the future.

The second one is to give your company a larger purpose. Don't underestimate the power of purpose. It needs to be big. It cannot be about you or customers, that’s not enough. What is your version of “making a dent in the universe?”

To keep people focused and inspired, give them something to work toward. We all need a reason to come to work (at least for the best people) and there is not a more important time to remind them. Otherwise they will leave. We all need a purpose; it is the only thing that people can hang on to through tough times. It is what makes the company resilient.

The third one is maintaining positive emotive energy. People are going to be worried, insecure, frustrated and even angry. You need to care about them and allow room for them to express it while making sure leadership radiates a sense of energy, not fear. Energy doesn’t come from empty words but a real sense of optimism backed by strategy and action.

A sound strategy to bring back the company is what forms the core of the energy and radiates them through open dialogue – not newsletter or email. Don’t drive these discussions underground and make sure all senior executives are available to talk with people. Open communication is important to maintain the trust.

All great companies go through very difficult times at some point and some even have near death experiences. They survive disruptions and even self-destruction in order for them to get to the next level. No companies are immune and anytime we think we are safe we are taking the first step on the path to decline. The concept of core competencies is an interesting idea. Whether the companies’ core competencies are giving products and services unique functionality or building a worldwide distribution, this could lead to a decision with companies avoiding to think "New Game." It provides logic for the strategy but also limiting strategic options. In the strategic making process, competencies need to go beyond the core. It is not a time to be academic. Strategy making is a dynamic exercise that allows you to see the whole system (industry) before you zoom into your value-creating activities.

When companies are on a path of rapid decline, and see the decline accelerating, they go into a panic mode and embark on multiple tactical measures that are not addressing the core problems. Being able to frame the core problems even under extreme pressure is critical and not putting 100% of your energy on things that doesn't matter. All the repeated unsuccessful tactical attempts will drain the company’s resources, human energy and customer confidence until they have no turning point. Maintaining the energy or Chi (Chi is a Chinese word meaning aliveness, life force energy or life breath) is vital for turnaround and it doesn’t matter if you have the right strategy, without the energy or Chi, you won’t be able to execute the strategy.

There Is A Difference Between Business Turnaround and Business Transformation. It Is Easy To Tell Which Is Harder.

All companies go through some kind of crisis at some point but what does it take to get out of it? There aren’t many successful turnarounds in large companies and the bigger the company and the longer the history, the more difficult it is for any turnaround and its success rate is lower. 

Harley Davidson in mid-life crisis when Richard Teerlink joined the company in 1981 as CFO, the company had US market share of 15% and reported a loss of $15m. The company was killed by its strong Japanese competitor led by Honda. In 1989, he took over as CEO and returned the company's focus to increasing quality, improving service and producing world-class heavyweight motorcycles. In the end it is the product that turned the company around. Harley Davidson recovered its U.S. market share to 50% and posted annual sales of more than $1.7 billion. Teerlink left his post as CEO in 1997, and served on Harley Davidson’s board of directors for another 5 years. He did a great job as a turnaround manager.

The story of IBM’s brush with bankruptcy is another greatest business comeback of all time. IBM’s problem was that it was quickly becoming irrelevant and experiencing zero growth. The company had also made some bets that didn’t work out. Lou Gerstner took control in 1993 and created more focus in the company. He did a great job as a transformation manager.

One lessons here is not mix up a turnaround with a transformation. It’s very important to distinguish between a transformation and a turnaround.  A turnaround involves a company that has fallen off the rails and has executed poorly and still competing in the same product/market space. It takes a tough driven executive to make it work.

A transformation is truly a lot more difficult and takes a lot more deep wisdom with execution playing a secondary role. The company must fundamentally change its mental and operating model. It is a reinvention and companies who are used to doing things their way find it difficult to start doing things differently. This is not a 3 or 6-month initiative. It’s very, very strategic, foresight driven and problematic.

For any successful transformation, it takes leadership rather than management. “I hire people brighter than me and I get out of their way” as Lee Iacocca puts it. I am not sure who said something like “Inventories and supply chain parts can be managed but people must be led.”

I’ve both architected and supported quite a few successful turnaround behind the scenes as strategic consultant in my career, my simple advice for transformation leaders is people don’t just care what you know unless they know that you care.  You need to earn that by caring and then knowing.  It takes inspirational motivation to motivate managers to commit to the vision of the organization no matter how hard it is to achieve the vision. It also takes intellectual stimulation to foster innovation and creativity to challene the groupthink or yesthink. It is as much an intellectual undertaking as much as an executional exercise.

The world is not ending. Winning for tomorrow requires a vision. Brilliant strategies don’t show up spontaneously particularly for complex and fast moving industries. It comes from strategic dialogues, strategic foresights, options, even failures and mistakes. The ability to see the problem as a whole and then integrate a variety of perspectives and not simple quick fix. There is no simple quick fix.

Robert Parker's Wine Scoring System Can Be Applied In Business Too.

Robert Parker is the most widely known and influential wine critic in the world today. His popular wine scoring system was the first simple way to determine the quality of wine. Parker is known for his preference for powerful reds from Napa and the Rhone and has inadvertently made becoming a wine critic almost impossible, since— in part because of the success of his scoring system. That takes a lot of fun away. Can you imagine we have scorecards for wine, food, paintings, music and dance? We can do that for business but not for art. Wine is art. Well perhaps business is art too!

Getting 90 points means a wine is of superior quality and character and is something you can share with confidence with friends and clients. And they don’t necessarily have to be expensive and sometime can be within reach. If a 90 point wine costs $30 then it is a smart choice. But it should not automatically means that you will like it? Same thing for business, an outstanding business model that delivers above average return may not necessarily be the right business model for you.

Wines rated 95-100 are considered classics, the best of their kind. Less than 2% of the 20,000 wines we review each year earn “classic” scores. Wines rated 90-94 are outstanding examples of their types. Wines rated 85-89 are “very good,” and under 80-84 are “good,” that is, they are clean, balanced and enjoyable. Anything below 80 points are generally not recommended.

I am not a wine expert. But I pick wine for all my best friends. But I think wines can be both good and good value at any tiers. I can recommend good wines that are ranked under 80 and bad ones over 85. For example, if I want a bottle for a weekend dinner with friends, an 85-point wine at $25 to $30 may be a better choice or good enough choice than a 93-point wine at $75 wine that requires five years in the cellar to reach its full potential. There is something call good enough. And it applies to wine, design, marketing and engineering. Over design, marketing or engineering often achieve the opposite results.

You need to understand the wine descriptors and understanding which wine embodies which traits. Scoring is only for general guidance. I find these traits can equally effective to apply in scoring of business strategies and models.

BALANCE

Wine like Pinot Noir needs to achieve a balance between the acidity of the grape against the flavor and texture. For business, you need to look at the business strategy to ensure a balance between investing for growth and delivering earnings. To avoid underinvesting that can cause a downward spiral. Yes you still need to deliver a P&L at an acceptable level in terms of earnings and ROICs but should never be at the expense of staying relevant and jump starting growth.

Recommended: Montecastro, Ribera del Duero, Northern Spain Red.

STRUCTURED

Structure is the framework that supports the elements of flavor, tannin, acid and sugar. The structure dictates the first taste to mid-palate to the finishing flavor. For business, a proper structure ensure there is a flow from ideation of new business opportunities to understanding what market it is trying to serve to the final go-to-market planning. The first taste of excitement of an innovative idea needs to be executed flawlessly and it takes a good structure.

Recommended: Louis Martini, Sonoma County Cabernet Sauvignon.

FRUIT FORWARD

Remember that first sip of wine provides you with the flavor of fully ripe fruit. That’s the kind of wine I like. The fruitiness rushes into your mouth. Fruit forward wines are primarily about the grape / varietal expression, over the expression of either place (i.e. terroir) or winemaking practices such as the use of oak, lees contact or managed oxidation. This is the same for business, customers need to get the sweet taste and delight in the form of customer experience when they first encounter your brand. Companies that do a good job in creating a memorable delight can be ahead of its competitions. In business, it means Delight Forward. Unboxing is a good example.

Recommended: Dehlinger, Sonoma County’s Russian River Valley.

BRIGHT

A wine can be visually bright, have bright aromas, or flavors. In each instance the wine is perceived vividly with high clarity. A business can be bright, it is when the company successfully create a culture of “brilliance” – a lot of common sense in how decisions are made by mid-level management. Bright is independent of experience. The ability to think quick, to look at options, to compare and synthesize—all these skills are particularly important to build a culture of "brilliance". The cycle of exploring, mapping and reasoning, asking the right questions, is really what builds organization capability to think critically and be brilliant. The best companies are always in pursuit of brilliance.

Recommended: Frei Brothers Reserve, Russian River Valley Chardonnay

There are two more attributes in the scoring system: Creamy and Fine Tannins. Anyhow, these scores make it simple for some to look at a wine, But it is actually quite difficult to pin down. Is an 89 good, very good or great? Is there really a difference between wines rated 91 and 93? Knowing that there are inconsistencies, prejudices and palate differences so wine needs to be re-tasted every couple of years. The same case for business, a business strategy that is working needs to be revisited every few years.

"Nothing makes the future look so rosy as to contemplate it through a glass of Chambertin" -Napoleon Bonaparte

Five Deadly Mistakes of Organization Transformation That Leaders Must Avoid.

So you are ready to transform your organization? You want your organization to leapfrog the industry? You want to deliver above industry average growth? And do you know what are the most common mistakes that leaders and even very smart and experienced leaders make? The most common one is sticking with the usual way, the easy way and the proven way. There is no usual, easy and safe way if the company has not been doing well or satisfactorily underperforming. It is not just about making a good product anymore. Leaders need to ask how does one make a meaningful contribution to society with product?

Whenever I was tasked to help global enterprises to move the next level, the first thing I did was to stop them from doing things the same old way. It was never easy. You don’t go the next level without taking calculated risks, offending people and forcing people to do things differently. No one wants change despite whatever slogan or lip service about how people want change. And everyone wants breakthrough. There is no free lunch. No pain no gain.

I’ve been working with some of the best high performance global leaders for decades to breakthrough and manage large scale transformation. These are the five most common mistakes CEO and their executive team make and all can easily be avoided.

Failing to build organization energy and momentum. Organizational energy is the invisible force which an organization uses to purposefully put things in motion and drives positive behavior to advance the company’s mission and business objectives. The strength of organizational energy manifests in the extent to which a company has mobilized its emotional, cognitive, and behavioral potential in pursuit of its goals and it makes company resilient. Energy traps often endanger productivity and innovation. You must understand how to release them from being trapped. This is not a one off exercise and cannot be performed by consultants. It is the executive team’s job.

Failing to have a vision and to translate that into a compelling and relevant story. Company cannot develop a strategy without a vision. A vision is not just a statement that vaguely describes a company’s aspiration. It needs to be authentic and anchored on the industry’s competitive reality and illustrate how that future if realized will benefit the organization and allow it to prosper and thrive. The vision needs to show the shared common destiny and a path to get there. Vision without strategy is worst than not having a vision.

Failing to understand how to create value and understand the core value drivers. This is very common for management and it is critical for the top 10 and all C-2 executives to understand what are the critical drivers of value for the organization. These ideas need to be deeply embedded in day-to-day managerial decisions. In mapping out company’s processes and decision structures, the CTV (Critical to Value) notion needs to be reflected in CTQ (Critical to Quality), QTR (Critical to Revenue) and CTC (Critical to Culture). Three of the most important metrics to organizational health. Getting the right decisions on a few of these key CTV points, the company cannot be too wrong even though it may make many execution mistakes which sometimes is unavoidable.

Failing to assemble a super team fast. Any successful transformation needs to have the support of a small high performance super team. It takes time for an organizational to rebuild capability and even hiring new people from the outside takes time. It is crucial that a company needs to assemble a swat team for quick deployment to solve any problem. Any problems that are left alone will signify that new management’s inability to drive change. Problems need to be fixed fast. Otherwise there is no credibility. This super team should always be looking out for the organization. They are people who take decisive action to solve problems. They are people who understand the vision of the company. And they are the people with high analytical ability (typically with management consultants training) and ready to look at any problems even without the experience and domain knowledge.

Failing to get rid of bad organizational habits and the incompetents. Any underperforming organization has bad habits and usually a lot of them. Be it leadership habits or organizational habits embedded in the mental model of leadership or organizational design. The first thing leaders must do is to get rid of these old habits and dogmas and people that are underperforming. The bottom 10% of managers must go. Don’t waste time on them. What do we mean by being strategic?

At the end of the day, smart leaders must ask the following five questions:

1. Do you understand the critical drivers of value and what are critical to quality/competition/performance/culture? Are they part of your management team’s KPIs?
2. Are you doing enough to focus or leverage investments in your core value proposition and brand story? Are you cutting back or divesting fast enough on unnecessary and non-strategic investments?
3. Can you name the top 5-10 people in the organizations that could potentially become part of your super team? If you can’t name at least 5, you have a problem.
4. Where are you spending the time? Are you devoting enough attention to matters that are important to building strong energy and momentum?
5. Are you applying data-driven perspectives on all aspects of decision makings and what areas you are not feeling comfortable that data might not be right or not properly interpreted?

Do You Know What A Growth Strategy Is?

This marks the end of another year. A very busy and fruitful year for us. Personally I was on the road for more than 200 days and I need to take a break - perhaps 3 days. What about my New Year's resolution? I need to cut down on drive and email. I need to cut down on attending unprodcutive meetings. I need to find three people to mentor that they can become the best. I need to revisit places from my childhood that were memorable. I need to back up my hard drive (I am 96 days behind). I need to produce a mini feature film and shot entirely with my HTC phone. I need to cut down on my public speaking. I need to have more discipline on getting enough sleep.

For companies, it is time to think about growth. Every company wants growth and it is harder and harder to come by. Many companies are busy defending their shares and don't even the luxury to think growth. The most successful growth companies adopt at least four best practices:

• Earn the rights for growth (business design/cash flow/business architecture etc.) and first focus on the core
• Understand discontunuties and when is the next S-curve coming
• Always think like a designer and think "customer value" first
• Seeing the whole opportunity horizon and understand what it means

A common mistake is comanies jumping into some cool ideas that are simply just novelty and blindly believe that it is growth. The secret for growth is having a robust strategy. Here I will share a little of my secrets or not so secrets. Before that I want to make sure you know that easiest way to fail is by jumping into the future without figuring out a path to get there. You must have a plan. A plan that shows the whole opportunity horizon (built-on-robust foresight) and careful analysys of the industry economics.

There’s no magic solution to jump-starting growth. Growth is a strategy but also a mindset, it depends on how you see and shape your future by the action you take today. It takes more than a vision. It goes beyond just having the best product on this planet. Best product is no gurantee of success today. Often good enough products stand a better chance.

Remember, some used to say that strategy is about “Speed, Price, Quality – just pick two.” I’d tell them, even if you picked them all, it is still not enough. You need to pick, “Speed, Agility, Focus, Quality, Relevance and Price”. Not one, but all, if you are playing to win. Despite popular books and articles may be telling you to try and fail often and even to celebrate failure, I don’t buy those ideas at all - these are excuses for people taking uncalculated risks. Risks are not just unavoidable, but needs to be managed. It needs to provide a calculated return, and not just say take risks and fail fast. That’s for amateurs.

Companies need to understand the full spectrum of their opportunity horizon. And once it is understood, then it takes focus. You also cannot just react to the future because by sitting and waiting you will miss it. You also need to understand the opportunity horizons that you are looking at and how each horizon can be impacted by different degrees of uncertainty. It is more than just aspirations; it takes strategic thinking and a lot of sense-making. After all, corporate strategy is a game of sense-making and organizing for the future. Yet there are multiple futures and the trick is how do you decide to play just one or more than one. This is the part that is difficult for many as they see strategic planning as a mechanical and linear exercise.

First we need to look at the future through three different opportunity horizons then we have a pretty good picture on what is needed and how to act to positively impact a winning business strategy. When we look at successful companies that often playing in different horizons while not necessarily winning all, there are a lot of common factors. But that’s a much longer post to write and for today, let’s look at these opportunity horizons in three stages:

Opportunity Horizon 1: Redefine and reinvent the core. This is about rethinking the core and how to make it relevant. Or how to defend against low-cost high value competition etc. At the minimum it needs to stop market share erosion and if done properly it should be able to jumpstart growth. Reinventing the core requires going deep into the company's core belief system and to realign it with what's going on.

Opportunity Horizon 2: Extend core businesses into related adjacencies. Companies should expect 20-30% of their revenue to come from products or services that didn’t exist today and they should share some economic synergies with the core. Not only should it deliver additional revenue, it should enhance the core to strengthen its portfolio.

Opportunity Horizon 3: Initiate strategic transformation. At this stage, the company should in a good position (both strategically, organizationally and financially) to invest in full transformation, which includes shuffling of business units, assets and markets. Not every company can afford a transformation and they need to earn the right to do so. Many make the mistake of starting a transformation on day one when the company was not in any strategically or financially sound position to do so. Transforming without a stabilized core is a recipe for failure.

I have helped many large companies to orchestrate growth and it takes more than creating continuous alignment and killing projects that are sucking up resources. Killing projects that are not strategically aligned means signaling a changing behavior. A lot of energy is needed to deal with changing legacy behaviors — those that are expended toward the old strategy and not the new strategy. Companies often run on auto-pilot without even knowing it.

Implementing a growth strategy means one must balance activity between constant reinvention of existing current management practices and fostering behavioral change to prepare for the new. It means they should challenge managerial assumptions about how do get things done, what risks to take and the rationale behind them, and develop a list of desired or optimal behaviors that align with strategic goals, and have managers create a “let it go” list of legacy behaviors to eliminate. It is about getting rid of the old and creating new ones all at the same time. Perhaps that is the plan for the New Year.

Happy 2015!

The Come Back Of Hardware. Is Software Becoming A Commodity?

The world is suddenly obsessed with smart technologies and this time around it seems unstoppable. Our everyday electrical and mechanical industrial object will now be occupied and ran by software and connected to the cloud. It also means each object (as small as some smoke detectors and as large as automobiles) will now be equipped with tons of sensors and can be able to adapt to different environment and individual needs.

It is essential that the next wave of industrial revolution will make us more efficient and empowered (and more human I hope), and data will be at the heart of this revolution. That's another big conversation. All the Nest, GoPro and Beats received multi-billion-dollar valuations through private investments or acquisitions and everyone is wondering why these hardware companies suddenly in such high demand. Because hardware and software are going through different commodity lifecycles and now software is becoming a commodity. They used to be difficult and expensive to develop and even to deploy, that that is changing. It is hard for software company to get into hardware much as hardware companies struggle to get into software. Hardware cannot be done by a few geeks in the basement, and involves massive R&D and specialists including megatronics engineers, electrical engineers, industrial designers, wireless engineers and usually takes a longer time to develop.

Software you can fix it with a download, and hardware you can’t. They are massive supply chain challenges when it comes to logistics and component supplies. The value of firms who can marry software and hardware will have a competitive advantage over their competitors. Essentially everything we use today will be fitted with some sensors, processors perhaps, and may be a screen and will recarnate and become of Internet of Things. For the last three decades, software engineering has advanced to a state that sophisticated codes can be embedded into machines. And the availability of cheap sensors and super powerful processors is powering this cycle of data revolution. All of a sudden, software, hardware and communications infrastructure are advancing us into a new era. Old world manufacturing + low cost computer processing + ubligious computing + cloud = smart new world and many cool products.

It sounds like the Apple story all over again, does it? The hardware and software integration capability of Apple, the ecosystem, the brand and user experience are now not only inspiring consumer gadgets company, not it’s influence is beyond its own industry. I know this is an overused story, but he Apple influence is still here, and perhaps it will be here for a long time even when the company stop creating great stuff one day. Microsoft ex-CEO Ballmer saw that coming in 2012 in a letter to shareholders. "It's important to recognize a fundamental shift under way in our business, we see ourselves as a devices and services company." Microsoft had the strategy right but couldn’t execute it fully with the exception of X-Box. Microsoft’s future revenue will still be coming in from software and it isn't going to change anytime soon. The transformation from software to hardware is harder that you think.

The idea that hardware is now the new software is pretty real. There is a business model implication here. These hardwares are mostly priced between $100 to $250 and they a gateway and great way to sell software. We are seeing a revival of hardware and this time, it is hardware first and software and then date on the cloud, it will bring new technological advances in cloud-powered hardware that boosts productivity, efficiency and manifests as beautifully designed objects that fit into our hands and homes.

The Best Kept Secrets Of Breakthrough. Everyone Should Start Practicing Them.

Everyone is looking for a breakthrough. The massive shift in generation differences in consumer behavior and rapid technological shift are casuing many companies to fail.... and it will happen fast. Companies that are stuck in their old mental model cannot breakout for many reasons. It is usually a combination of all that causes them to be irrelevant. It includes leadership’s blind sight, organization legacies and lack of foresights and the list goes on and on...

How often companies can act swiftly and not taking a wait and see attitude? All the time. It takes strong leadership to take bold decisions even though they feel fear while making these decisions. Here are a few ideas, which I often make accessible to a my select clients. How do breakthroughs happen? It is not just luck or strategic thinking. Can they be engineered? Are there preconditions? Or is it a skill that we can develop and learned? When companies are stuck whether in an old paradigm of doing business or a legacy business design, they need breakthrough.

Exploring the “Grey” area. The central core of organizations contains beliefs that were built up over the years and a value system that provides us with perspectives of the world and forms the grayscale of our personality. Seeing the world in black and white is terribly dangerous. Sticking to your core does not mean you should not understand the ‘grey’ around it. Making explicit attempt to push the “grey” area of what consider your core.

Anticipate and Leverage Moments Most breakthroughs don’t happen through excessive rationalization or planning. In fact, almost all breakthroughs are sparked by “moments.” This is one of the things I teach people about looking for breakthroughs. The process of finding any breakthrough – whether in business, technology or design – often involve immersing oneself in large amounts of data and extensive debate and synthesizing information. Most people fail to see the moments when they happen or fail to capture them. I have a long list of things you can do to maximize it happening.

Expand Awareness through Emotions. There is so much myth about emotions; we often associate them with the extreme cases when we overreact or how they prevent us from making the right decision or making us too aggressive with the things that we want. These are all true, but emotions also have a positive side – if you know how to use them. Emotions are our inner sensors at work, sending us weak signals from the outside. It triggers our desire to heighten our senses as our whole and even affect our brains in memory, basically expanding the operating parameters of our cognition. It helps us take in more information, store them in a deeper place inside our mind, hold multiple ideas in mind at once, and layers a feeling over objects and situations.

Imagineering as Daily Ritual. Unless you’re in the business of creative production such as film, animation or video gaming, most likely you don’t have a need to use imagination in your daily work. But imagination is not a tool we can call up on demand; we need to practice it every day in order to maintain our ability to imagine. Imagination is a major part of how we frame and solve problems. The practice of applied imagination (or imagineering) can increase the number of creative options available for a specific problem that we’re trying to solve. Imagination is part of our subconscious way to assist with idea generation. You’re not so much thinking of specific ideas of how to solve a problem, but rapidly and randomly envisioning what might be, what could be, and what couldn’t be. It's very easy to compare creativity and knowledge in an abstract, metaphorical sense – but we know that our imagination is developed from the knowledge we gain in the experiences of our daily lives and little encounters.

Practice Design of Meanings. Try to design a breakthrough project or pilot activity for yourself as experiment. Some breakthroughs are sparked by eureka moments based on insights – but far more are based on design. Design-driven innovation is spurred by thinking about possible breakthrough features, meanings and product languages that could emerge in the future. This cannot be done by talking to consumers or looking at current user behaviors. Consumers can’t really imagine radical futures, as they are anchored and invested in the current one; thus they are not helpful in anticipating possible radical changes in new product meanings. Big breakthroughs don’t necessarily come from disruptive applications or advanced functions; sometimes it’s new meanings that shift the universe. Think about how every one of the everyday objects that we see around our home can be transformed: instead of being simply functional, consider how to turn them into symbolic objects of irony, desire and affection.

It's a Bird! It's a Drone! It's Amazon's 3-D Smartphone? It Displays 3D Images, 3D Maps And 3D Gaming!

Amazon has been working on a number of cool devices for a while. The temptation of playing the hardware game has always been there beyond just the e-reader. This month they will finally be unveiling a new device and there are plenty of rumors out there on what it actually is.

It is most likely going to be a Smartphone. Mostly made by Foxcom. Most like not producing any profits for Amazon. Most likely supported by a suite of Amazon Cloud based services. Most likely to be below the standard set by Apple, Samsung or HTC. But it will be a Smartphone that has some distinctive features, including 3D capabilities projecting 3D objects as part of its interactions. It will be using gyroscopes, accelerometers and other sensors to power the experience. Most likely mid-range specs such as Qualcomm Snapdragon 801 processor and 4.8 inch display (keeping cost down) and many advanced camera functions; likely using 3-4 cameras and a Sony sensor. It will be a futuristic experience with 3D gestures controls. Gimmicky or not, we will have to see.

Smartphone adoption has reached its maturity but everyone is pushing new ways for consumers to use mobile devices. Average prices will drop a further 15-20% and the top end will come under pressure. Android market share will stabilize around 70%-73%. Amazon certainly thinks it is not too late to play the game. Every player will not give up on it and will try innovative ways to jump-start a new S-curve for the Smartphone. Even Apple is struggling. What new applications and new interaction paradigms can they think of that are considered unthinkable today? We are working hard 24x7 on these ideas.

Back in 2010 there were around 180 Petrabytes a month of data moving through the networks from a single user and it was mostly voice, and today with streaming video, social media use and mobile gaming - now averages 1,900 Petrabytes a month and is expected to grow at least 40%-50% every year thanks to additional wearable devices. It means by 2020, in a week’s time, five Exabytes of information will be sent by the average Smartphone user. Traffic problem ahead.

On June 18th we will find out. And suddenly everything makes sense.

The Competitive Advantage Of Switzerland. Is It Sustainable? Is It Replicable? It Is Where Design Thinking Is In Action.

We are trying to fix the world, the companies and many of our wicked problems that were mostly 100% man-made. Economists, policy makers, academics are spending too much studying our dysfunctional organizations and societies and trying to figure out why the high level of poverty, joblessness and hopelessness and how we are struggling with competing against low-cost producers and how low-cost producers are struggling with ultra-low-cost producers. The reasons are quite obvious and the problem is at a systemic and structural level. Capitalism has been suffering from major setbacks for the last 10 years and the future in its curent form is uncertain.

Switzerland has a very high living standard. Even compared to the London, Seoul, Tokyo, Hong Kong and San Francisco. It has few natural resources, yet it has managed to have one of the highest per capita incomes in the world. It has a decent private health care system and a sound currency and a very efficient public transport system. It has one of the lowest marginal tax rate on average income workers in the world at 20%. And no capital gain tax. Average folks in Geneva, Basel or Zurich would need to work for 7-8 hours to make enough to buy an iPad mini, pretty much the same as in London and New York. Geneva and Zurich cost around 45-50% more for food which I still don’t understand why and the food is not great, perhaps I am paying a prenium for super-organic-fair-trade-politically-neutral food. This very small country can maintain leadership in multiple industries from pharma to chocolates, watches and banking and insurance is a miracle. How do they do it?

They did it without the benefit of a large domestic market. And they did it without extensive integration in supply chain which is a key competitive advantage in electronics industry as an example. Switzerland is no question the most innovative country in Europe, ahead of second-placed Sweden followed by UK, according to an annual study by the European Union. Switzerland is no perfect model, but it has a lot for others to learn. Singapore is trying hard to do that. And Canada and Australia should do the same. The Swiss are super practical people and that is being reflected in how companies are being managed.

Switzerland is both united and divided. That's the beauty of it. This is where Design Thinking is in full action. It perfectly fits my definition of Design Thinking which defines Design Thinking as the search for a magical balance between business and art, intuition and logic, concept and execution and control and empowerment. Switzerland is a country that should not do well as it defies most of the norms for strategy. No common language, lack of scale, high labor costs, overly divisified in different industries, lack of deep political beliefs. It is a country made from linguistic, political, historic and religious divisions and yet maintaing that balance. And it is not political, comparing these crazy politics happening around the world that literally stopping our world from moving forward.

Switzerland's strict neutrality is an important driver and many countries should consider adapting the same. We need to de-politicize the world. It is creating more problems that it can solve. "They swore an oath to remain different from one another", wrote Denis de Rougemont, Neuchâtel-born philosopher. "The reason for their solidarity was not to attain collective power but rather to maintain the autonomy of each individual."

Switzerland's wealth is driven by the multinational companies in highly innovative and competitive sector. I am not sure exactly how that happened and curious to do some investigation and study. Studies and studies will tell you this is the result of a well-developed higher education and public-private co-publications. I suspect there is more that that. Honestly if you ask them, most cannot tell you why they did well.

Here are a few Swiss innovations that you may not have known other than the first form of cheese:

• Electric telegraph 1774
• Cut pattern for clothes 1844
• Chococlate bar 1849
• Army pocket knive 1891
• Meat beef cube 1908
• Toblerone 1908
• Potato chips 1950
• Electronic wristwatch 1959
• Electric toothbrush 1960
• Helvetica 1957

Despite all, Switzerland is still behind in terms of commercializing its innovation and IP. Perhaps a little more design thinking will help them to stay in the top.

Strategy Lessons From The Safari. There Is More Than Just The Survival Of The Fittest.

I recently took my strategy and innovation class out of the classroom. Guess where we ended up? A safari or a zoo (whatever you want to call it). What’s a better place that teaching strategy where you can see the survival of the fittest. It was a suggestion from my students.

History is filled with examples of animal species with Dinosaurs as the lead example that were made extinct by their inability to adapt environmental change and the prediction from scientists is that there are more to come. An alarming finding that was published in the scientific journal Nature that suggested more than a million existing species could be extinct by 2050 because of climate change. Probably 80% of those species we have never heard of.

Can studying why species in the safari went extinct provide us with lessons for business? The answer is a yes, the first being that not everyone will survive. Everyone knows that but the big question is how to make sure your company is not on that list? To survive, it means understanding what is your food chain. There is a simple food link between two animals and many animals struggle to obtain adequate amounts of their particular food(s) and cannot simply change their diets as other foods becomes available and ultimately face extinction. For business, the lesson is about your revenue streams might not sustain as the industry structure shifts and you need to reinvent your business models. Companies needs to change diet before they run out of food.

The second lesson is to know your role in the food chain. Some animals in the jungle can eat both plants and each other, as well as use each other for shelter and nesting. Companies need to learn to use other companies by way of strategic alliances to shelter competition to increase their chance of survival especially for those who are not in a position of influence the market. Think about what these terms like predator, prey, continent, climate, and habitat means in business strategy and what role does your company play? Darwin suggested that extinctions were a prolonged and often undetectable process. It is true for business as people or animals in the jungle don’t see survival in a strategic manner.

The third one is understanding your competition and their innovation capabilities. Companies should not just worry about the external change such as discontinuties but need to be aware of the evolutionary potential of other companies or species if we are talking about the safari. Animals cannot do that because they do not posses the intelligence, nor will they hire consultants - but companies can. It is the practice of strategic foresights, what we do that to ensure companies can engineer their own evolution and create their most favorable conditions for that to happen. Someone once said “The rules of the jungle do not apply to those who wrote the rules of the jungle." There is a lot you can learn by spending a day at the safari with me.

 

China Is Pushing The Frontiers Of Innovation. It Needs To Move Beyond Just Technological Progress. China Is Behind In Commercialization And It Is A Big Gap To Fill.

There were lots of interesting debates about "new thinking around innovation and future development of enterprises in China.” With almost three decades of sustained economic growth and orchestrated government support for advance technology research resulted in a large talent pool (but still not large enough) and many are well trained by foreign univerisities and companies.

China has made impressive achievement in many areas including network technologies, article physics, structural biology, genomics, human space exploration, supercomputing and high-speed rail which is part of China's centrally designed and state-led innovation model. Moving towards a more innovative economy is one of the main challenges facing China's President Xi Jinping. He understands what is important for China to sustain prosperity and development. China has developed a range of policies to create "indigenous innovation" to reduce dependence on foreign countries for advanced technologies including government procurement, competing technology standards, and requiring technology transfer from multinational corporations in return for access to Chinese market. Is this enough?

At the same time there is more proof that the western style of management is becoming more and more less effective and sometimes even becoming a barrier to innovation reform. To achieve China’s vision and development goal, China must produce and support innovators whose ideas and execution will enable China to create greater and broader economic wealth beyond manufacturing, infrastructure and real estate development. For most companies in China I've talked to, they are a long way from understanding what it takes to make innovation real beyond basic R&D and to compete outside of its demestic market.

China’s innovation cannot just rely on progress in science and technology but in both education and research; the most crucial piece is to be able to own the core technologies and design applications (let me stress - technology alone is not enough, without design), which China is still reliant on foreign companies. The most important strategy is to acquire innovation skills as a core capability so China’s companies will be less dependent on foreign IP and can create ecosystem of technologies that local companies can build upon.

Innovation goes beyond idea generation but also commercialization. It requires a new level of thinking and cross-industries and collaborative-competition that is currently not happening in China. Currently, the model of business education doesn’t deliver on innovation training as they basically modeled after the west.

Most of today's Western style of management and business problem-solving is primarily made up of prescriptive remedies still very much rooted in decades-old conceptual frameworks, developed in the 80’s as a response to pressing events then. They not only have long outlived their usefulness for Fortune 500s, they were not designed to handle today’s unprecedented pace of continuous disruption nor are they irrelevant when applying in emerging economic power such as China which has a very different historical, political and cultural values as well as a unique operating environment and a well deserved national aspirations.

My guess is that 80% of what they teach in business schools MBA’s curriculum today are not applicable for managers in China. Despite managers in China being thirsty for management development training, the net results are less to be desired. In short, we are beyond the point of questioning the effectiveness of western management practices; we need a China approach to management. Or perhaps China should take on the role to reinvent management.

What's Next BlackBerry? You Need A Plan. You Can Have A Future. But You Need To Think Radical.

I am a BlackBerry Fan. Or I was. Big one too! It is one of the best innovations for the working professional. I missed the old flywheel BlackBerry that I can throw it across the room and it survives. I was really hoping they could turn the company around and have a real strategy. The problem remains that the management is so disconnected with the real world and the engineering focus overshadowed the needs to create something beyond just a good user experience. The BlackBerry Z10 is a beauty. But that's not enough.

I don’t think the Fairfax deal is a good one. Fairfax, which already owns 10% of BlackBerry, plans to pay $9 per share for the company, about 3% more than its closing price which I think is way undervalue. So what does the company worth? There is no right answer.

Blackberry assets include 1/cash 2/patent portfolio 3/real estate and jet 4/software all add together and then minus any long-term debt and liability. Their hardware business pretty much worths nothing. The math is not hard. 1,2 and 3 are easy to value. Software is not so simple. WhatsApp claims to have 250 million active users, and they are now a paid application. BBM, on the other hand, is free and have more compelling features. BBM can make money from this if they know how to play the game. It is not the BBM customers that they used to know. I think they have good chance to play in the OTT communication game on cross-platform devices.

The radical rethink of BBM can create a survival plan and could easily bring in $350-400mm a year and would contribute about $0.50 in earnings per share (EPS) and be worth roughly $6 per share (using 12x earnings).

Patent is a secret treasure chest. In addition to patenting their won technologies, BlackBerry has also bought tons of patents from the bankrupt Nortel and other stast-ups and spend time developing a whole new operating system. Typically patents last 20 years from the date of their application, making BlackBerry’s 3.6 year average very attractive. BlackBerry’s 9,268 granted patents could worth between $3 to $4 per share depending how intense the bidding and that makes already $10. Now add roughly $1.5 billion plus in cash (after write-down) and the sale of building and the jet. The very minimum the company is worth $13 a share. Lenovo is happy to pay that but Canadian goverment might not like the idea.

China cellphone maker/start-up Xiaomi latest funding round values it at $10 billion. That’s nearly two times BlackBerry’s current value. It is currently the sixth-biggest smartphone producer in China. Clearly, its strategy of selling high-spec smartphones at low-spec smartphone prices is paying off quite well. Blackberry has a lot to learn from other companies. Blackberry were distracted by Apple and being dragged into a no-win game. The company was operating with yesterday’s operating system in terms of strategy and don't understand how fast the world is moving. It was destined to fail. There is still a slim hope. You need to think radical.

For Disclosure. I personally hold BlackBerry shares and Blackberry bought research services from Idea Couture at one time.

Some Celebrate Failure. Some Even Romaniticize Failure. The Best Strategy Is To Avoid It!

The new M/I/S/C Bounce Back issue is out in newstand.This issue is packed with great articles about how companies should deal with adversity. It is one of the best issues ever.

For the last few years, magazines have made failure romantic, and start-ups love their failure stories. It’s true, there are some great stories out there: at the top of the list is Steve Jobs who was fired from the very company he founded. J.K. Rowling took Harry Potter to 12 publishers; all of them turned her down. Walt Disney filed for bankruptcy in his early twenties.

And there was Bernie Marcus who was the son of a poor Russian cabinetmaker from New Jersey who got fired from his job working at hardware store. With US $2 million in capital, Marcus and a partner went into business and opened a different format store with hangar-size, no-frills outlets, friendly service and a huge selection of products, they called it Home Depot. For Marcus failing was about character building and part of the journey to excellence.

These stories are both motivational and inspirational. Magazines from Fast Company to Harvard Business Review jumped on the bandwagon, selling the message it’s ok, even cool, to fail. Some people take this as a ticket to push bad ideas forward. Sometimes people carry failure as a badge of honor. There was a guy who wanted to join our company; his resume read ‘six times failure, a proud veteran.’ When I asked him whether he had any confidence that he will succeed the next time, he said no. It sounds like Vegas to me. The organizations we design and operate are not agile enough to support smaller experiments and the bigger the company is, the harder it is to bring innovation to the market.

Companies are using the stage-gate approach, taken from product development, to the innovation process, which is a big mistake. They’re also applying the wrong metrics to measure innovation projects. But the fact is failure is a bad thing – if you can avoid it, avoid it. Instead of putting too much focus on those who ‘made it’, and their struggles and resilience, we should be really be focusing on teaching people how to avoid failure in the first place.

The problem is we should not encourage people to fail, but should not penalize them either. We should be encouraging them to take calculated risks. The danger I am seeing is when young people embrace failure in the wrong way. It almost seems like they’re trying to race through more failures to earn a badge, rather than trying the best they can to give the idea the best chance. This ‘failure movement’ is mostly supported by mediocre people who have few ideas and cannot execute. They continue to romanticize failure, to the extent that they start to expect it. We need to prepare for failure, but never expect it. The failure movement is growing an irresponsible attitude toward risk-taking and Design Thinking.

Just because you fail many times, doesn’t mean that you have a better chance of emerging from challenges unscathed. It gives people an excuse to think harder and learn to apply Design Thinking principles to model scenarios to avoid or minimize failure. Most innovation can’t avoid failure. In fact failure is often by design, it is part of the process of iterative development and market learning. I don’t consider that failure.

Prototyping and learning from mistakes can ultimately lead to a higher chance of success, but it also de-risks project mistakes that usually come from the weaknesses of our human mind, such as hindsight bias. We should be teaching people how to deal with those biases.

The failure movement often falls prey to both of these biases. How many people can you name that went broke while attempting various business ventures, and are still broke? Can you write a list of these people more easily than a list of successful entrepreneurs who overcame immense obstacles to succeed? I think we are giving ‘failure’ too much credit.

I can see why those stories sell, they’re comforting to read and somehow people feels closer to success. This is not the case. If you’ve failed 50 times it doesn’t mean you’re closer to making it. Let’s stop over-glorifying failure and avoid the pain. We know what it means when you have your fingers burnt once. The smartest way is to teach people to learn from Other People’s Failure (OPF). There is so much we can and should learn from it.

When I teach my strategy courses in master level programs, 80% of my teachings are around how companies fail and how to avoid it in the first place. For me, it’s called ‘strategy.’ There are so many free lessons our there, you don’t need to pay the price to feel the pain. Someone did it already. There is no need to romanticize failures, instead, we should learn how to best avoid failure and, in the worst-case scenarios, be prepared to bounce back from it. That’s what Design Thinking can do.

For the full story, pls see the June issue of M/I/S/C which is available in 26 countries and digital subscription is available through Zinio.

Media Disruption Is Not Slowing Down. Mobile Is Now The Center Of A New Ecosystem.

The media business is not seeing the light at the end of the tunnel yet. When people asked me about my magazine and the economics of that, they were saying why am I in publishing business. Well that is not my core business, just a hobby. It has been almost three years since the first publication of MISC and readership is growing nicely. We're now in 28 countries and we have have the digital version. I am getting a lot of positive feedback from readers from all over the world. Perhaps I should make the next issue the thickest one. This is the first cover that was shot in Milan. And the next cover will be shot in Shanghai.

The media business is certainly not easy with the never-ending technological disruptions we are experiencing and new behaviors keep evolving, we are nowhere near the end of it. The word social media makes no sense anymore as it is already main stream doesn’t matter how you look at it. Many traditional media types continue to cling to an old way of doing things, based largely on making minor adaptation to existing approaches and some are relentlessly experimenting with finding new revenue stream, largely still through advertising or sponsorship.

There aren’t many new opportunities for business model innovation if you take a strategic view, people are still thinking about advertising or sponsorship. Yahoo and Google are the same. The hybrid model of readers’ empowerment and buttoned-down professional journalism is already fullyoptimized. Media executives are spending a lot of time thinking about the future of their industry and what it will look like in 2020. 

Five years ago everyone is thinking about the online model and suddenly the tablets came and changed everything. And what’s next? Multiple screens device, new interactivity through voice, gestures and more external data sources, and glasses and watches etc. No one knows how content discovery and consumption model will evolve given the abundance of choice consumers have today. Neutrality is probably not the best interest for the media industry.

Media business is still suffering from an identity crisis, at least for another decade. The business model will not change, we will still end up paying for content through transactional, subscription or advertising models although there will be more flexibility on how we purchase them. With every person with a smart phone also has a video camera that can turn them into amateur journalists, news will become real-time and shows us different views of any event. And contextual bits will be consistently updated and events unfold. The Twitters of the world are the instant updates and these short bursts will create more noises than news value and readers need someone to break them down into manageable pieces.

Audience now lives in a multi-screens world. They can choose between raw news and organized news. The three key drivers of mobile disruption are hyper-local (geolocation), integration with home appliances and digital payments. The three together can put mobile at the center of an entirely new ecosystem. It is not merely another form factor. It is the biggest leap forward since writing first arrived about 7,000 years ago, which only impacted a tiny percentage of our population. Word of mouth was the only “information system” for most of humanity and now that will be turbo-charged by mobile as it unlocks an incredibly deep desire and capacity among us (humans) to share personally relevant information and feelings such as “I am waking up happy to a sunny morning” etc. These personal information is competing for attention with other news. And for me, I'd rather be reading what my friends are saying than the news. CNN is depressing.