innovation playground Idris Mootee

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.

In Algorithms We Trust. Do We?

Let's try to paint a likely not-too-distant future. In this future, everything around us will be managed by algorithms. They manage and recommend what we want to watch; they control traffic of our driver-less cars; they control those drones which deliver our pizza; predict for you which one of your friends will become your future spouse, etc. They will make our life effortless and predict what things will happen next or what's best for us. We all wish that it is that simple.

As we are picking up massive data every second, algorithms are critical to how we make sense of them and our reliance on algorithms is growing by the second. But how much faith should we put into those algorithms, and how reliable they are depends on who you talk to. The accuracy of the algorithmic differentiation (automatic differentiation) is key in dealing with data volatility in many complex cases where accuracy of data is critical to the final outcome. I don’t know when we can have statistical evidence comparing how often driverless cars mistakes and how often human drivers make mistakes or how well a software program investing in stocks makes mistakes and human making investment mistakes.

We need to develop programs to check whether algorithms are working as they were intended and monitoring algorithms by the results they produce based on machine performance metrics. Vetting algorithms in advance isn't practical at all as many are too complex for their outcome to be predicted. Algorithmic differentiation is used to fine tune algorithms that are complex to optimize. We will be placing our faith into the accuracy of these algorithms and trusting that they will deliver. I think we may be over-optimistic and mining a lot of data using statistical analysis still has a very strong random component to it. To optimize these models we need algorithmic differentiation and sometimes it feels like a scientific random number generator. The more data we have, the more simulation is needed and the more reliance on the significance of data, and significance means sensitivities. We’re in the midst of a transformation when industries are exploring how to use big data to create new business models.

There’s one certain thing in big data, it’s that all algorithms are not created equal. The biggest question is how many jobs will disappear when algorithms take over human jobs? People ask the same question during the first industrial revolution when machines started making goods a lot faster and cheaper. Are we entering a world in which the algorithms themselves will be competing with humans? Honestly, I just don't like it when algorithms make decisions for us. They can help me analyze my options and probabilities, but not making a decision until they prove that they can think smarter than me. And so the game begins…

In The Near Future, Instead of Choosing Between AT&T, Verizon, Sprint and T-Mobile, You Can Also Pick Google or Apple As Your Mobile Carriers

The US mobile industry has been in a clear state of duopoly with Verizon and AT&T occupying about 70-75% of both consumer and enterprise market. T-Mobile is attempting to disrupt the current status but the impact will not be sustainable although its Uncarrier attack effort is causing a lot of noise. To maintain competition and sustainability for all is a tricky balance and the key is to ensure it will not endanger the long-term ability for players reinvest in next generation networks. InterDigital, Qualcomm, Ericcson, and Samsung are actively involved in 5G wireless development and carriers need to be ready for the next upgrade cycle in 3 years.

Strategically speaking, an industry structure only becomes stable when three firms dominate a market or 90% of a market, when the market share ownership reaches a ratio of roughly 4:2:1. Simply, the number one provider has market share double that of number two and it doubles that of number three. With AT&T and Verizon roughly splitting the market, with Sprint and T-Mobile US struggling to grow their market share. This gridlock is not changing unless either AT&T or Verizon acquire Sprint or T-Mobile. Then there will be only two players left.

Duopoly may not be good idea for consumers. Although duopolies will eventually lower prices as much as perfect competition would. More than 270 million US customers (roughly 91.0% of the total US population) have the choice of three or more wireless providers, while 250 million (or 82.0%) can choose from among four wireless providers. For everyone, subscriber growth is slowing as we are near market saturation. This slowdown means acquisition costs will increase, as everyone is spending more to steal each others' customers. Spending to get new customers is not a way out. Carriers need to think how to reinvent their business models. That won't be possible unless they can a highly differentiated offering or customer experience. There are only two ways to do this. AT&T has been the most aggressive in expanding offering new services providing home security and automation services and providing cellular connections to non-smartphone devices or any IoT. It will pay off for them.

In the world of 4:2:1 market share structure, everyone is trying to invest on revenue growth through promoting churn. And the shifts in market share at similar prices for similar products depend upon the relative willingness or desperation of any one plater to invest at rates higher than the sum of market growth rates and the inflation rate. If markets are growing at1.5 %, and the inflation rate is 1.5%, than a leading contestant has to invest at rates greater than 3% annually. Any firm not willing to do so loses share.

If every player is willing to do so, then prices and margins will be pushed down until at least one or all stops investing. That is the case for Verizon and AT&T, and underpins the argument advanced by Sprint and T-Mobile that they cannot prosper in the long term unless they are allowed to merge. For Sprint, they are taking customer away from T-Mobile with trade-in program, as part of its "Uncarrier" program, T-Mobile will match trade-in pricing from other carriers. So, it's possible that the company could match whatever deal Sprint offers. And Sprint also has a matching program, so it goes on and on unitl one of them cannot afford it anymore.

Now if Google is starting its own cellular service (very likely) by buying capacity on T-Mobile and Sprint networks in the US. That would essentially create a disruptive scenario. Although for the last few years the competitive threat from the mobile virtual network operator (MVNO) looks to be subsiding; but by buying capacity on the networks of T-mobile and Sprint, the company will come into cellular business directly and it will offer Google phone and data plans to customers.

The question remains if Google’s intent is to create a limited market roll out or a full-scale national share grab. The word out there is Google is launching the service later this year. It will for sure be a very affordable package. And will Apple follow and buying capacity from T-Mobile and allow services for Apple devices? Apple’s entry will create the “The Prisoner’s Dilemma” for carriers. The carrier’s biggest fear is that if it says “no”, the business and growth would go to a competing carrier and yes they are fueling Apple’s market power. iPhone customers typically spend as much as twice or more the U.S. national average monthly wireless bill. So with Google entering the game and speculating Apple might do the same, the industry structure would definitely be destabilized. It is not reasonable to think Google might be able to take up to 2-3% share from AT&T and Verizon. The carriers won't be too happy. But the threat to carriers is small and mostly in the long term.

How Do Breakthroughs Happen? Here's My Little Secrets For Breakthroughs After Helping Executives For Decades..

How do breakthroughs happen? Can they be engineered? Are they pure luck? Or are they the result of skills that we can develop and improve upon over time? Along with the fear of the unknown and the pressure to make it happen, breakthroughs come with an incredible sense of possibility and satisfaction.

The experience of uncovering a breakthrough is exhilarating and hard to explain. It’s a sense of not knowing exactly where I am going, but knowing that I am going somewhere. Here’s my secrets to achieving breakthroughs:

• Preserve the “Me”. The world we're living in today seems to be a completely different one from 10 or 20 years ago and a crazie one. Sometimes I wonder if the world is really changing that fast at a break-neck pace. There is a notion that if you can’t change the world you should change the way you look at it, but I don’t like the idea of changing myself according to the world and adapting to it. The central core of what’s “me” contains beliefs that we’ve built up over the years and a value system that provides us with perspectives on the world and forms the grey scale of my personality. Black and white only exists in film, photography and my Prada suit; seeing the world in black and white is terribly dangerous. The person who views things only in black and white will always be miserable or unsuccessful in whatever they pursue. That’s not and never was the rule of the universe. Sticking to your core does not necessarily mean you are not open to the world. It means you open the world to “you” and everything you experience adds one more layer of sophistication to the “you” and heightens your awareness and sense of being. Any personal breakthrough need not give away or suppress the “you.” What you experience every day should make a beter “you.” Breakthroughs require the “you” in “you.”

• 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 involves immersing oneself in large amounts of data and extensive debate and the synthesis of complex information. Most people fail to see the moments when they happen or fail to capture them. I started working to facilitate these moments a long time ago, making them happen more easily and more often. How I ask questions and how I push people to their limits (as I do with my staff) is one way that I try to help them to experience moments. I feel bad for sometimes being seen as critical and demanding, but that’s how I get myself and others to create those moments.
• Expand Awareness through Emotions. There are so many myths about emotions. We often associate them with extreme cases where we overreact, when they prevent us from making the right decision or make us irrational pursuing things that we want. This is all true, but emotions also have a positive side if you know recognize and respond to them. Emotions are our inner sensors at work, sending us weak signals from the outside. They trigger how we expand the operating parameters of our cognition, help us take in more detailed information, hold multiple ideas in our minds at once, and ascribe meaning to the things, people and events in our lives.
• Imagineering as Daily Ritual. Unless you’re in the business of producing film, animation, video games or other highly creative outputs you most likely 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 using it every day in order to maintain our ability to imagine. Imagination is a major part of how we frame and solve problems. Much like yoga, tai chi or voice training, imagining requires that we put in practice time in order to expand our ability. Applied imagination (or imagineering) can increase the number of creative options available for specific problems that we’re trying to solve and help with tasks like ideation. Rather than focusing on developing ideas or how to solve a problem, Imagineering is about 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 works by employing that information subconsciously until it’s ready to break through into awareness.
• Practice Design of Meanings. Try to design a breakthrough project or pilot activity for yourself as an 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.

You Think Innovation Is Hard. Business Transformation Is A Hundred Times More Difficult. And In Fact It Is The Number One Barrier For Strategic Innovation.

People think innovation is almost just about new ideas. Funny how many think Blue Ocean Strategy is a big wake-up call when all it does is communicating the very the basic and simple idea of strategic innovation – how not to compete with your competitors in the same game and instead create a new game.

A strategist has the choice between getting back into the fight with existing competitors or creating a new space when there is no competition AND no proven customer demand. This is the hardest part - "no proven customer demand" and let's see what the board has to say when you tell them that your strategy cannot be validated quantitatively. New game strategy is extremely difficult to make happen for a number of reasons:

• It is hard to convince the board to bet on a market that has yet to exist
• Successful founders CEOs are stuck seeing things with an old mental and underestimaing the threats
• It is hard to change the minds of people who wanted (and have vested interest in) the old business to work and not willing to give up
• It is hard to make the switch as it requires new mindset, capabilities and organization design
• It is hard to be credible using the the current brand entering or creating the new market space
• There is the question of how sustainable the new value logic from a customer and market perspective

Looking back at the history of industrial revolution or our information or technology revolution, red oceans vs. blue oceans or a better way to describe it is “today cash flow" vs. "future cash flow" or "defender vs. "attacker" etc. Avoiding competitions in the red oceans give rise to innovation opportunities that create new market space and could triggers a new round of industrial transformation. The author did not address the dynamics of the industry transformation.

Straegy is never that simple as red and blue oceans, organizations are increasingly inter-connected as they leverage brand, patent, talent, technology, knowledge, channels, products and services from each other often located in disparate parts of the world. These complicated inter-connections often prevent companies to reinvent themselves even the opportunity is obvious.

There are many hurdles and barriers for transformation including cognitive, resource, capabilities, motivation and political ones that prevent making a new game strategy implementable. Idea Couture Brand-driven Strategic Transformation goes beyond creating, communicating and maintaining a sense of identity and belonging for the employees, we bring foresights into the process and connect the align the brand with the business strategy and the strategic futures.

The brand is used like a savings account for emotional equity while we develop an engaging and energizing feeling of commitment to the organization by creating and co-creating a shared destiny; this is where it creates the highest impact. Conventional visioning and mission writing exercises often fall short to drive transformation. The idea is to get executives and senior managers in front line employees to move beyond empty, slogan-driven communications, which are more likely to lead to detached cynicism than to engagement, and to help them develop a clear personal commitment to an organizational purpose that will reflect in all aspect of managerial actions.

Business transformation is the execution of an integrated, corporate-wide program aimed at aligning the present and future as well as the organization, strategy and brand, it ensures alignment and internal consistency by reshaping the leadership, strategy, finances, organization and operations of businesses as a whole. It is not a Power Point, it is the energy flow of an oranization.

Apple: A Rare Case Of Successfully Building A Truly Sustainable Compeitive Advantage. It Is Definitely Worth The Current Valuation Premium.

Here's the cover model for the coming issue of my M/I/S/C magazine. We shot the cover in London and here is a picture of her taking a picture of me. The concept seems surrealistic. The next M/I/S/C Design Thinking and Customer Experience Issue will be in book stores Sept in the US and a bit later in Europe and Asia/Australia. Now I am working on the Dec issue which is Design Thinking and Creativity. I am thinking of who to invite to write for this issue. BTW this is a picture below of Idea Couture's latest window display. I am liking it.

If you've just upgraded your iPhone you will not be happy if Apple is bringing out a new one in a few short months. In addition to launching both iPhone 5 and iOS 5, there will be the new iTunes 11 bought to you from the Cloud.

Expect a very clean design and iCloud will be closely integrated with iTunes. iTunes Store is actually turning into a browser (funny without we seeing it that way) and it will actually be integrated into the entire app. Your music will be backed up by the Cloud and everything will be fully synced.

It is harder and harder to beat Apple with its deep integration between apps, OS and devices. It is reported that iCloud will be offered for free initially, and at some point users will be charged $25 annually for subscription of the service. That’s another way to get another recurring revenue stream just like MobileMe service.

Apple has finally locked-in deals with big record labels Warner, EMI, Sony, and Universal. With 30% of revenue from iCloud’s music offering with the major lablels, 12% with those holding the songwriting rights, and the remaining 58% for Apple to keep. That’s a good profit margin. Not only it is helping with the bottom line, it is further stenghtening the Apple fortress with all these integration.

Apple is building a fortress around its suite of product/services/experiences and it is almost impossible to break that. It is not only around music and devices. They have just filed a patent application that an iProjector that I believe is in the making. It makes perfect sense, a minisize slim projector that sells for $600 to $1,000 and most of them have problems with setting up. And you thought it should be easy. I will not think for a second of getting one if it is fully integrated with my MacBook or iPhone or iPad. With interactive presentations and sharable contents between devices.... and not to mention a really good looking Apple design.

The patent application "Projected display shared workspaces" was filed in February 2010 and it is basically a system for taking what's on screen and projecting it onto a nearby surface such as a wall etc. The true innovation is that about the system proposed in this filing is that it can combine projections from multiple devices into one screen, in what's dubbed the "shared workspace." So you can simultaneously show power point from your computer, a video from your iPhone and notes from your iPad. No switching between apps anymore. Called it a “presentation canvas”?

Apple’s horizontal integration strategy across devices and channels and vertical integration strategy from chip design to software and retail is creating a truly sustainable competitive advantage that is hard to replicate. For that reason alone, its valuation skyrocketed. This is a brilliant example of classic business strategy theory at work.

Every single Apple products complement (compete) and complete each other. Get an iPod, and you can download content via iTunes and access them trhough iCloud and use that to move content to iPad or other devices. The sort of control over the entire user experience or process, from hardware to software, strengthens customer loyalty and provide lock-in. You cannot leave Apple once you’re in. It is becoming the consumer equivalent of IBM for business.

The New Game Of Strategy: Applied Design Thinking In Business Innovation And Transformation

Just when I thought I can have 2 days in an office then I realized I have to be In NYC tomorrow for a few days. I am writing this post on a flight after missing my connection in Houston, and just finished teaching a three days Strategy graduate course with a focus on strategic innovation and design thinking. What I did was bringing the Harvard Business School case study method of teaching and apply it to design thinking and innovation, it is really interesting and probably an innovation itself because innovation means going against the conventional analytical thinking.

The shift from teaching competitive strategy to strategic innovation changes how the case studies were originally written for. I am using the same teaching material but instead applying atotally different pedagogical focus – which is how to avoid the very obvious and how to develop and apply ‘New Game’ in strategy making. It was intense for the students but they were liking it. I theorize, practice and teach these concepts and so for me, it is not academic, it is real.

Strategy is never that simple as picking the right competitive positioning, segments or competing on different dimensions. It is often complicated because it involves changing of mindset and mental models – mindsets that inspire individuals and teams to think imaginatively, to take risks, to seek out, and to expand the boundaries of a business or redefining customer value. It is hard.

Then there are structural, systems and processes for sharing of ideas, sense-making of data and working together. This includes developing new perspectives and collaborate on ‘white space mapping’ which was never taught at business schools. The very nature of competitive advantaged has changed and I challenged anyone who tell me if they really have a real and relevant competitive advantage that they thought they have.

The information revolution continues and is enabling companies to easily (and sometimes cheaply) match current competitive differentiators and rapidly create new ones. The result is that competitive advantage is evolving from simply focusing on differentiation, low cost or focus. The idea is to do all, the stuck in the middle can be a desirable position if you understand the underlying economic forces. Most business school students and even professors hardly understand how to apply the Five-Forces properly and let alone adapting it to a very different business environment where speed, empathy and community become key strategic elements in addition to bargaining powers and competitive dynamics. We need a new framework that takes into consideration the use of community in business strategy development. I’ve used cases including Method, Microsoft X-Box, Loco Motor and a few others to illustrate the concepts.

I think I should start developing teaching notes based on the original case study but with a different teaching emphasis. Classic views on strategy include Joseph Schumpeter focuses attention on innovation and entrepreneurialism. He suggested that bigger the company the more resources and diversification one can bring to R&D and as a result get better return on innovation. Michael Porter, following Alfred Chandler, focuses attention on business organization and competitive strategy and introduces the concept of cluster to explain competitiveness.

Today’s the nature of strategy and competitive advantage is drastically shaped by strategic innovation -- powered by customer co-creation; desire of consumer to change the status quo and powerful social innovation networks; integrates customer deep into business organization; demand chain into supply chain and contrasts inter-firm relations in terms of market, and closed or semi-closed and open-networks.

The attempt to develop competitive advantage is only the first step. It is sustaining the advantage that is far more challenging. How often companies invested millions and millions of dollars to create barriers for entry only to find out they lasted only for a short a few months. Waking up one morning seeing that your industry value chain was being reconfigured and the expiry date of your business model was last week is not exactly a fun thing. If you find that every six months you have to innovate on something the market will embrace is too exhausting, it is time to embrace design thinking.

The Economics of Co-Creation. Can What Happened To Microbrewery Happens To The Auto Industry?

A lot of talk and interest around the concept of co-creation. It is no question that this is going to have asting implications of how products and experiences are designed, developed and marketed. In 3-5 years, customer co-creation will be the part the norm of everyday business. Much like early days of ecommerce when people struggled with the legal, technical, operational issues. Slowly these issues will work their way out and we would look back and say “that’s simple…. makes perfect sese.”

What’s a great example of co-creation? Let’s first try to define it here as sometimes people refers it to anything from idea crowd-sourcing to technical expert groups to simple product/service/marketing customization. One good example of real co-creation is a company called Loco Motor.

I met Jay Rogers (founder and CEO) at the PDMA Co-creation Conference when I was moderating a panel. He was hosting the event and I was extremely impressed with what he is trying to do and has achieved to date. It is the first co-creative automobile design and purchase experience in the world. Just as the auto industry is dying for new ideas and change and Detroit needs a new strategy and it is more than making a better car. There are many structural issues to deal with and it is complicated. Jay is attempting to disrupt the auto industry by using co-creation as the strategic core.

The people in the car industry that have tried to innovate in the last 100 years and mostly fail, what makes him think he has a chance? Perhaps Detroit should concentrate on redesigning the business model and the whole experience before redesigning cars.

The first product Rally Fighter sells for just under $60,000. It’s an incredible car that looks like a life size HotWheel and gives me fond memory of my childhood. Remember the Hot Wheels yellow track?

The Rally Fighter is designed by the online community and ismanufacture at the microfactory in Phoenix, Arizona with a sustainable and highly efficient process. Jay wanted to build cars all his life, after raising $10 million seed capital, he launched the company with a simple idea that is extremely difficult to pull off. Loco Motors hosts a passionate online group of car-lovers or fanatics who compete to design vehicles for some regional communities in contests that run about once a month. The winning designs is then produced and sold to the communities.

There is more than to the flexible and customizable micro-factory, the concept here is when you give people tools, a strong community network with shared passion, some inspiration, small incentive you are in game. In fact, he is reinventing the customer co-creation experience for automotive. There are more than needs to be done in order to reinvent the economics of the industry. I think every business should look at Loco Motots and see what is relevant for their industries.

Will Loco Motors remains to be a niche business or eventually springing into a platform that supports a auto-cottage industries I don’t know. But we also need to think how we reduce traffic including rethinking local supplies network for certain products and cutting down unnecessary traffic.

An example is to look at how we replace pizza or UPS delivery with perhaps flying delivery drones – pizza right through to your windows. I am not sure if someone has thought about flying delivery drones man by 14 year old part-time students that doesn’t even have a driving license. The military drones can be converted to do the job. It is more realistic than flying personal transport, because in the event of an accident the worst is you don’t get your pizza. May be this is another idea of Jay, his Marine Corps background can be very useful. A central drone delivery operations theater that supports the nation’s takeout industry.

Apple Should Forget The Movie Studios. Go After The Banks Instead. I Want My iMoney.

This sign is up for our San Francisco office. The archtiects and the girls are working day and night to get this right and a lot of furniture are still in the Atlantic Ocean. Shipping furniture from Europe to US is always slow. Hey we need to get the righ stuff we need to wait.

Congrats to Nick Hughes (managing director of Signal Point Partners and LBS alum) for picking up the Social and Economic award at the Economist Innovation Awards a few weeks ago held at the Science Museum in London. Nick was recognized for his part in creating the M-Pesa venture in Kenya, a mobile money-transfer initiative – something that is long overdue in the world of banking unmet needs.

M-Pesa was first launched in 2005, allow people to transfer money, pay bills and save using a mobile phone, without NO bank account. Handset to handset money transfer, you would wonder why we don’t have it here. Now it is widely adoption in different parts of Africa with over 12 million users in Kenya alone. I see this is more than a technology innovation; it is a social innovation to facilitate economic development in the developing world.

Today, it still takes weeks to clear a check, transferring money is still a pain and fees are hefty. It is time for disruptive change. PayPay was great; never really get beyond the web. It should have been Twitter Wallet or Facebook Money that we are using now. Twitpay is one of those; the service has only 15,000 users to date. They are not the only one trying to attack the payment ecosystem, seeking out ways small and large to tear down the fortress the banks and credit card companies have built to defend their businesses.

PayPal is trying to harness the creative powers of the open Innovation to rethink payments. ClickandBuy's Facebook application allows Facebook users will be able to easily execute money transfers among each other and purchase Facebook apps quickly and conveniently. Another one called Square, a new company founded by Twitter cocreator Jack Dorsey, lets anyone accept physical credit card payments through a smartphone or computer by plugging in a free sugar-cube-sized device — no expensive card reader required. I don’t know why Google is not attacking this seriously, big markets and big money. I guess that’s the problem with bottom-up innovation and efforts are not aligned with opportunities.

And I'd rather using Apple i-Money and use i-Tunes to manage my banking. Steve, forget the movie studios..go for the banks!!!! I am looking forward to getting rid of my wallet…so I have more rooms for gadgets.

Off to San Francisco for IC Innovation Masterclass and BTW our street sign is up. Competitors alerted and we are in game. Magazine gone to the printer. New staff starting this week. Partnerships discussions with a few firms. Busy week and now looking forward to catch up with my couple of dozens of frineds in the Bay area.

For Now Tablet Is Dominated By iPad, And Then There Are Hundreds Of Others Who Want A Piece Of The Action.

Microsoft just posted a really good quarter and has been openly criticized for its lack of strategy in the tablet market and other consumer market. This software giant has failed to innovate in many fronts despite massive resources and strong talent based. The company has also failed to create any buzz on their product launches; you wonder what is not working with this company. It is not lack of money for sure, and not about lack of talent either.

The iPod has only been on the market for half a year, the buzz has quiet down but adoption is high and broad unlike previous products. This is an instant success and looks like no one us close to being a threat. Though Samsung, LG, HTC, Dell, HP and Lenovo, and others are unveiling their own tablets, no on has the advantage of full software and hardware integration. Apple's complete integration of hardware, software, operating system, and applications is a major competitive advantage.

Many think Galaxy is only potential threat to Apple. The Galaxy's screen has about three times the surface area of typical smart phones, including the phone. When it comes to tablet features and performance, here's how the Galaxy measures up to the iPad. The Galaxy is about the size of large paperbacks and don’t expect battery to last more than 8 hrs.

Samsung has identified two problems to solve as a competitive weapon to compete against iPad. First is flash. And then the other is face-to-face communication. The Galaxy has two cameras, one facing you and the other facing away, and you can use the Qik app to videoconference with other online members. This is an attractive feature and for sure will be matched quickly.

There are a handful of Qik enabled phones out there, but it still hard to find someone to talk than using Skype. iPad2 might incorporate a camera and FaceTime. Android have more apps, above100, 000 apps but the proportion of high-quality apps that you have to pay for has not gone up significantly. Apple leans way the other way on this, limiting some of its 300,000 apps solely to iPad distribution. And most are willing to apps for the iPad. Mobile usage has become pervasive. Mobile devices (smart phones, tablets and whatever in between) will be experienced dramatic evolution in the next 5 years. It is the new competitive ground and becoming a real category on its own rather than something as complimentary to the PCs.

These tablets or large smart phones are fast becoming mini-computers with nearly 13 million iPads shipped this year and expect to grow 3x next year. These tablets’ bigger screens promise more immersive experiences for marketers. The web will become more app like and the user experiences will converge. I can see tons of innovation opportunities to drive new behavior. It is so easy to view content on iPad and people considered that as less private, and more willing to share. 2-3 users sitting in a coffee shop can easily view the screen. And as a shared device, the iPad invites social interaction and imagine design apps for real life social interactions rather than virtual. A game that can be passed around and played or something that people can use in a retail environment, sort of self-help navigation in mall and view merchandise and promotions etc. I can come up with another ten scenarios.

I am looking forward to see the Blackberry Tablet rumored to cost just under $500. The PlayBook will have a smaller screen than the iPad (7-inch PlayBook versus 9.7-inch iPad), and there won't be a 3G option (it shouldn’t as it should use the BlackBerry connection). The screen resolution will be similar the iPad, but will translate to more pixels per inch. The PlayBook will also have bigger ram than the iPad (1GB PlayBook versus 256MB iPad), and RIM also included in two cameras (5MP back, 3MP front). I think this is useful for BalackBerry users like me and will guaranteed a minimum adoption. Great, now I’ve got one more thing to add to my briefcase.

Don't Waste This Crisis. It Is The Best Time For A 'Reset'. Sometimes It Takes A Life Shake Up To Put Us Back On The Paths We Need To Be On.

There were tours visiting our office last week, people were curious about what we do and what kind of people we hire. It is an interesting question. I guess our job is to help large companies go through mid-life crisis.

Crisis is a popular word these days and it seems like there are no shortages of them. We use the term in today's economic, humanitarian, political and environmental climate. The word is much associated with extreme negative 'tests' of our human abilities or survival as a species. This is also a test on our intelligence and also a test of humanities and to what extend it exists.

How do we get out of this crisis and what can we learn from them? How many of our crisis are man made? How many of them are systemic? How many of them are truly avoidable? I think this is the big midlife crisis of capitalism and even humanity. Wherever a crisis occurs there are creative successes resulting from adversity and that’s not what you see when you’re in the middle of it.

Crisis creativity a fundamentally part of our human characteristics. War is no question the worst type of man-made crisis and lot innovations were attributed to war ironically.  Here are some examples: The very first chemotherapy drug was developed from mustard gas, which ironically was the first weapon of mass destruction. Binging hospital equipment to soldiers in the South African conflict medicalized field dressings and X-rays were used, although initially the machines were large and cumbersome and could only be used in hospitals. During the First World War blood transfusions were performed in the battlefield, and saline transfusions for fluid loss were also used. Some branches of medicine, such as orthopedics, plastic surgery and rehabilitation, mainly benefited from the large number of war casualties and lessons learned under these conditions were applied to medical treatment for civilians.

So what crisis creativity can we get from the current midlife crisis of capitalism? Before we can delve right into how to cope with a midlife crisis we have to understand what it is. It is time when you realize your youth has passed by and it creates tremendous feelings of self-doubt. These feelings can lead to depression or worse self-destruction. 

It is exactly what’s happening in the word of business and management. The idea of profit maximization at any cost is creating an imbalance and the many theories of management have proven itself to be flawed. A lot of retrospection and reflection needs to happen here.... assessing one's goals and seeing how far one has come. Many start anew when they are in their mid-40s, the quintessential “mid-life crisis” is really just another manifestation of the search for self and transformation, whether it is for an organization or individual oreven ideology.

What a person needs to do most when he or she is going through a crisis is gain control of his or her own life. Obviously when crisis occurs there is some external force we can't control causing us great stress. Great stress creates great emotion. Double Whammy! For a person going through a mid-life crisis, he or she needs to do is to make change and commit to it. This is the point where it would be wise to actually map out your life. The same thing for business, there is no better time to map out the future of your business, bring in a new sense of purpose and energy to power up the organization.

Rethink about the past; reimagine the future and preparing for a big reset for it. Don’t waste this crisis, get something out from it. Crisis can create opportunity for change. Sometimes it takes a life shake up to put us back on the paths we need to be on.

Deciding On Your Big Strategic Innovation Move? Don't Forget One Small Detail: How Do You Make Money?

Technology-based companies typically make one common mistake: They get too caught up in technological innovation, particularly developing new technologies, or get too obsessed with the next killer technology and thinks the world evolves around their latest invention. Even if they find the right applications for their technologies, they often defer the serious effort needed to figure out how they create economic value – or how do they make money? They did not come up with the answers but insisted sailing forward ending up with business without a business model. I find that funny, a business without a business model should not be called a business in the first place. It is different when a company needs to change their revenue strategy as they move up the value chain or extend their activities in the business eco-system. That's a different story.

A business without a clear idea of how it makes money is like a zombie, and for a business without understanding their roles and purposes is like a zombie without a heart in additional to a brain. Not sure what is the technical name for that? The walking dead?

Traditional technology innovation often leads to a strong internal focus and thus being too fixated on pursuing engineering development and lacks early consideration on commercialization, marketability and industry architecture. As a result, many technologically innovative firms fail to bring their products successfully to the market or create a sustainable business economic model.

Every company should have an idea how they would like to compete (create value) and make money (capture value) and that guides the strategic planning and implementation of all its innovation and planning activities. Strategic innovation should be about highly selective market entry with the intent of subsequent market domination.

There is too much hpye on business model design. The truth is there are only a handful of options so there is no need to glorify the effort. Organizations are increasingly inter-connected as they design, source, buy, make, distribute and market their products and there are many configurations you can play with. But that is not about the business model, that is the business design or value chain or value network (I think this is a better phrase). Business models are primarily about how to capture the economic value by extending the revenue sources. It is not uncommon for companies to operate outside and across traditional industry boundaries and definitions.

Any strategic innovation effort could lead to reconfiguration of assets and capabilities. When you hear the name Skype, what do you think? Probably free Internet calls. What is Skype’s business model? Well they never really have one unitl now. It is a great offering and good user experiences and the customer value proposition is compelling—free.

How do you make money by providing free voice calls? At least it looks like they finally figured it out, it is now “free plus paid services” model. Is there any business model innovation here? I don’t think so. They charge you for calls outside of Skype user base. They did try a new innovative experiments including sending money via Skype. However, when your corporate parent also owns PayPal, that won’t work. It was shot down very quickly. I don’t think they will try Skype auction next.

Next they should be putting their innovation effort on mobile, there are lots of opportunity for innovation that brings in new and real revenue. So they end up becoming a telecommunications company? They need to find a real problem to solve? Go back to the unmet needs? money from “upstream” partners. The local cost or free customer proposition limits their abilities to charge more, so they need to go somewhere to find revenue. Serving ads won’t get them where they want to go. The mobile area is still where the money is..at least for now.

I remember the analyst conference last year when Josh Silverman’s presenation was to address the following:

• How does Skype generate revenue?
• What drives Skype’s cost model?
• How will a software company change real time communications in ways that legacy telcos cannot?
• How is Skype structured to address its various market opportunities?

The net message was that they expect to double their revenue to over $1 billion in 2011 from their 400 million registered users. And maintaining segment margins of 18%-20%. Solverman stated that there is a communications paradigm shift going on where hardwired networks and devices are gradually being replaced by software-based networks and flexible devices.

For Silverman, Skype’s “opportunity is to become the world’s leading communications software company. To reinforce his point, Skype will not simply be on familiar telephony devices, it will show up in intelligent TV sets, car dashboards and intelligent public access terminals such as bank ATM’s all tied to a common network. Well that's a nice aspiration, but hardly a business strategy with a business model. At the end of the day, can they just tell me what are they planning to do in the next 3 years and where the revenue will come from. This is not the question people like to address.

It Is Time That Google Needs A Reset. Now Facebook Places. Next Facebook Faces. Then Facebook Realtime Mobile Directory?

Here's Simon and Ashley as part of a team working on a social strategy for a very cool company. Part of the mission is to look at their competition and coopetition. In the world of business strategy and competition, friends can become enemies overnight. Google is definitely not happy with the idea that Facebook is sitting with 500 million users with 50% very active. What can they do?

Back in 2002, Google was competing with Overture and other search engine for shares. Overture was the search leader and was mining 3.2 billion pages, roughly 70 mm more pages than Google. Shortly Google climbed to 3.3 billion pages and continued to extend the gap. Soon after Overture bought the Web search assets of AltaVista and Fast Search and Transfer (including AlltheWeb), to compete with Google head on.. and the battle began...

Google won AOL business away from Overture; and Overture won Freeserve away from Google. We will be seeing the same battle all over again when this time Facebook is the rivalry? Google is the place to find anything and that is extending to places with Google Map and Street Views. “Local” is still hole in the Google world. Facebook Places is an innovation to fill that hole with a social-media twist. Facebook users can now "check in" to an existing list of nearby locations from their mobile phones or add new listings themselves, sharing that activity with their friends.

Facebook will potential become a platform for local business search listings, the same strategy that Google, Yelp, Foursquare, Gowalla, and a few others that are fighting to get local advertising dollars. Facebook Places is the latest example of how information access is empowering new behavior.

We don’t know if these behavior will become mainstream. It is not difficult to imagine that I will be able to use my Facebook app on my mobile device to find local business. I won’t have to open my laptop and Google a restaurant if I can just use my mobile device, with added comments and suggestions from my social networks. Facebook's decision to add location data to its product instanly creates a Google-scale competitor overnight. With so many businesses already have Facebook pages, it is easy to pay and extend that into Facebook local search. So pages + places = Yellow Pages + instance update on products + prices right in your pocket.

Today, 100 million people a month are using Google's Maps for Mobile product but it doesn’t mean much in terms of barriers for entry, at least not for Facebook. Google knows very little about me other than what I search but Facebook knows my friends, communities and what I am passionate about. Google needs a reset. Buy FB stock if it goes IPO.

What Game Theory Can Teach You About Online Dating? There Are Plenty Of Room For Innovation And Money To Be Made.

A few days on the beach is too much for me.  But perfect place to write my blog posts. Watching these love birds on the beach, I started to think about game theory and love. What advice an economist can provide for online dating service by applying game theories?

Finding a spouse is a game, a serious and sometimes high risks (high reward I hope) game. We are looking at different types of network behavior (the high demand princess, the career type, the girl next door and the appearance-over-substance-and-insecure type etc. We all kind of know how the game works, and some people are better at it.

A quick primer on game theory: Game theory is a branch of applied mathematics that is used in the social sciences, most notably in economics, as well as in evolutionary biology, engineering and military strategy. It attempts to mathematically capture behavior in strategic situations, or games, in which an individual's success in making choices depends on the choices of others, pretty much like chess game.

While initially developed to analyze competitions in which one individual does better at others expense (zero sum games), it has been expanded to treat a wide class of interactions. Imagine, an online dating service that only the super attractive can join? Or the super successful? Or dating only for virgins? Or lawyers dating lawyers? How niche we want to get? Using these examples, anyone looking for an opposite (or same sex) can exit once they find the right person.

Imagine a dating site for the super gorgeous and handsome. Every member’s preferences is based on looks, and therefore their payoffs are equal to how good looking their partners are. Although good looking is subjective, it is also quite objective compare to other factors. There are easy ways to use a software algorithm to identify what features are considered good looking plus information on weight and height.

In this game, everyone is looking for the best looking person and share the edge with the ideal partner who can maximize the rewards from such a relationship. Since everyone is attempting to maximize their rewards.

It would start with the most attractive woman or man finding the second most attractive partner and exiting the community with maximized rewards from both parties’ ends. Then the third most attractive person, seeing that the prospects of at picking the most attractive person or the second most attractive person, will settle with the fourth most attractive person in order to maximize rewards, and the thing continues on and on.

When people exit the system, the next most attractive pair will become the optimal choices in the community for each other. This model does present many problems, if you are not among the best looking; you simply have to wait for your turn. Other factor includes timing, if an attractive person enters the community at a particular time, it will change the order. You may be pushed back to the wait list. I will need a few hours to build a spreadsheet modeling out the different outcomes. I also need to add the factor of “desperateness” too. What if we are not talking about just appearances?

Let’s introduce another element- virginity. OK this real, a husband and wife team decided to create an online dating site only for virgins, called YouAndMeArePure.com, It primarily caters for virgins to meet other virgins (not sure what's the average age of their members). Imagine everyone there is a virgin, and then I wonder how age plays a key factor.

Unlike other dating site, you can always go back to the game if the matching doesn’t work out. In this case, you only have one chance. Because if you lose your virginity, you can no longer join this dating site. So technically, there is only one chance for both parties. This changes the game dynamics totally.

If we apply game theory to this business, the first and most attractive virgin will be gone quickly, but age may play a key role here. I am not sure a 45-year-old virgin, no matter how attractive, will get to the top of the list. So how does that change the game dynamics? This complicates the business rules. I need to spend the next few days on the beach to crack this one.

I don’t know exactly how the rules work since I am not a member. You obviously have to be a virgin to join, or you’ll have your membership evoked once you’ve lost your virginity. Not sure how they validates that. Yes you can buy gift certificates and V-Cards that ID your V-ness (or degree of V-ness) on the site. I am not sure if you regain your virginity through surgery counts (if you’re female). Or they are forgiving to those who lost their virginity by all kinds of accidents.

I am already spending too much time here; I should be applying my game theories to something more useful. Such as when Blackberry enters the table market how Apple should response. Enough talking about virgins.

Innovation Needs To Expand To Include "Leadership And Management Innovation". Business Schools Need A Reset.

Here is our summer collection. Everybody like these. I guess the message is cool. I get people coming up and ask me where did I get those.  Rethinking management and leadership - one innovation that is less talked about is “Leadership and Management Innovation”, OK what does it mean?

Management practices have always circled around a narrow view of Return on Capital and that drives many of the key business decisions. Optimization of profits, financial capital and assets are an important part of executing a business strategy, but have we thought about how to innovate “leadership and management” itself. I mean new thinking around business strategy that provides additional bottom lines beyond just financial. Where money, purpose and systems are aligned.

Any CEOs who are only interested in maximizing short-term profits or trading hedge funds and companies are not the one that can steward organizations to a healthy and sustainable future. So what do we mean? Here are some examples.

There are cases of CEOs who have broken away from the norm of the “classical, narrow view of what investor accountability which is suffering from QRB (quarterly returns obsession). What they have been doing in innovating the very core of leadership and management and rethink the role of it. Here are some examples:

Founder and exCEO of Nike, Phil Knight, who responded to global protests by overhauling the company’s labor standards and then lobbied for other firms to be held to the same standards; Jeff Immelt, CEO of General Electric, who sought to convince shareholders that legislation capping US carbon emissions is a smart business move; and Yvon Chouinard, founder and CEO of Patagonia who was the first to pledge 1% of annual sales to grassroots environmental organizations and the first major retail company to switch all its cotton clothing over to organic, the first to make fleece from recycled soda-pop bottles.

Each of these business leaders broke the rules of what their own organizations would have considered the right thing to do, and is not only profits, profits and profits. Leadership requires building a culture of “Integrity”, creating a brand with “Authenticity”, reinforcing purposes and values through “Communities”, encourage the organization’s decision-making style for “Transparency” and making sure key resource decisions need to consider “Sustainability” beyond just environmental.

Management needs to innovate itself the very idea of management and leadership. CEOs have larger responsibilities, not only creating a viable future for the organizations and return for shareholders; they need to be change makers of our future societies. Real change will not come from governments; it will be the multinationals that possess the power. My observation is that that the biggest constraints that business leaders facing are their “inability to value new types of “competitive advantage” and the true power of “sustainability” embedded in business strategy making.

Government and NGOs can advocate our social problems, clean water, climate change or obesity or women empowerment etc, but top business leaders are having a hard time interpreting, sense-making, translating them into business strategies, One day we wake up and realize “Sustainability has become the new Capitalism.”

On a different note, MIT Global Challenge is a wonderful idea towards solving many of our problems. In 2011 the global MIT community will be invited to celebrate the 150th anniversary of a world-changing institution. In the spirit of celebration, innovation and service, the MIT Global Challenge is launching a competition to involve the MIT community worldwide in innovative, multidisciplinary problem solving, reconnecting alumni with the spirit of invention and enterprise that pervades the Institute. Idea Couture is proud to be a partner to design and develop the platform which is an unique online space through where people can engage in an ongoing, interactive process to identify problems, propose solutions, reward the most innovative and workable ideas, and document experiences as the winning ideas are implemented in communities around the world. Our team is very excited to be on this project.

There are no shortage of global challenges. Some are really complex. For example, the inequality of the distribution of natural resources on the planet, especially of energy, gives rise to powerful structural tensions within the systems that try to resolve the problem locally with uncivilized methods. 

Another example is business as such. The obvious globalization of worldwide production all the more powerfully enters into conflict with the national character of political activity, when business in the lawless space of an international muddle acquires the forms of earlier, wild capitalism with all the terrible consequences for society and the environment. But the attempts of some public movements to stop the globalization of money flows are waste of effort: no one has the least chance of successfully resisting the laws of economic development. These are no simple challenge that simply throwing money at it can solve the problem or creating a new policy. It truly requires innovative thinking. Probably too much for the sunny weekend.

I am pleased to officially announce that Idea Couture is the proud sponsor of TED 2010 Toronto. We’re looking forward to connect with others in this exciting event. Expecting to see many cool people.

Off to the arrport to SF for a a few days. Back-to-back meetings but looking forward to meet up with old friends and colleagues.