innovation playground Idris Mootee

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?

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.

It Is Time For China To Think Real About Innovation And What Policies And Practices Can Propel China Into The Next Century When Labor Cost Will Double In A Few Short Years And Intensified Talent Shortage..

It’s election time in the US and everyone is talking about China. China bashing happens before the election and after it’s over, people will be back to business as usual. The fact is US trade deficit is due to domestic factors and not Chinese policy and we need to address the very core of "structural competitiveness" rather than these nonsense talk. We should be focusing on innovation on a large scale and reinventing industries of tomorrow. US will always procure from low cost countries whether it is China or others.

China is an integrated part of the US (and the world) economy and no one really has any idea of the true implications of rising Chinese labor costs and what does it mean for China, the US and the world? I’m traveling across Western remote China (I was in India last week) this week and visited dozens of companies and trying to understand development even in the remote provinces, so it’s the perefct time to write this blog post about innovation in China.

Labor costs in Guangdong province (in the southern part of China which is sometimes called the factory of the world) have been rising at 13-15% a year and with rising costs for logistics will at some point make China less attractive. China has tremendous competitive advantage even with rising costs.

First, the extreme flexibility and scalability of workforce is unmatched by any other country in the world. For them, if they need to ramp up a factory in 2-3 days with an additional 1,000 workers that are prepared to work 14-16 hours a day to meet a production deadline, they can do it.

Second, it’s a tightly integrated supply chain eco-system, the main reason being that companies are not moving their factories inland to save costs is the speed-to-market. Consider that a strategic innovation in industry structure by design.

China are constantly “playing” with the idea of “process innovation” by incrementally improving the way they make things and adapt to market needs. It is a matter of time that they will start to think how to capture high value opportunities going up-stream in the value chain, which resides in the design and technology development. Currently designers, engineers and marketers are the ones who create and capture most of the value from innovative products. Policy makers in China understand this (no surprise) and are pouring massive dollars into research and development. The five-year plan calls for “indigenous innovation”, which the government thinks it can foster by subsidizing “strategic” industries and strong-arming foreign firms to transfer intellectual property to budding national champions.

And smaller companies are happy to copy and learn from whatever they can get their hands on by working with their customers. The question is can China truly develop its own innovation capability beyond absorbing know-how from international companies, which are under pressure to protect their IPs, and trying to bring in as many jobs home as possible? Can innovation be orchestrated by the state? And is the education system and workplace training support the needs? China does not understand innovation. It is just way too difficult for any Chinese innovative ideas to move from the lab to the marketplace, there is a lacking of complete view of market dynamics and infrastructure.

Policy makers in China is taking a very short-term view and they need to balance between research and development as well as lack of market orientation and design capability. And they have no clue how the system works in the Valley and government bureaucrats will not tolerate the complete free market system that works in the Valley. “Favorism” is still the dominant way of big investments for obvious reasons and antitrust and competition laws are clsoe to non-existan or not-enforceable.

So that alone creates big barriers for start-up challengers. I don’t think China has done enough on new product innovation alone, not to mention strategic innovation on a larger scale. Product innovation is often the most important driver of growth. In most cases over 50% of the growth of many categories from snacks to drinks and electronics came from just a single new product.

China is a far friendlier place for product innovation than the developed markets because the cost of going to market is not as large and consumers are more forgiving when innovation products are on constant beta. And when products fall into grey area of regulations, China is the best place on earth to launch products and don’t need to wait for permission, and they might never need to. Combine with a big domestic and uneducated markets, this creates the ideal environment for innovation.

It Is Time For India To Think Big And Stop Their Obessions With Jugaad. What They Need Is Bigger Asipirations And Design Thinking Competencies.

I wrote a blog post about two years ago titled “Is the Age of ‘Indovation’ and ‘Chinovation’ Becoming Real?” and it was very popular piece and I’ve got a few publications calling me including Knowledge@Wharton and others seeking out my point-of-view. Two years later and I am writing this post in India and will be in China next week, perhaps it is time for an update.

Let’s start with the question around innovation in India and is it really happening? Or happening enough? Well the answer varies depending who you talk and what industry sectors you’re referring to.  For the Indian pharma industry, it is not without trying but there were no commercial or very little success so far. For the auto industry, there are moderate successes but I won’t call it breakthrough innovation. For IT mainly software, there are hardly any effort and it is not because of there’s a lack of money or talent. These tech companies understand the risks and it is easier to just write codes and make money. 

Was this due to a lack of aspiration, unwilling to commit or was it due to the lack of ability to execute successfully?  In my opinion, India doesn’t really get innovation and seriously lacking robust innovation capability. And I don’t mean R&D. Their world-class engineering capability was not put to use solving problems that yet to exists – unknown and unmet needs of customers. 

They need to stop thinking innovating only at the bottom of the pyramid but start to build aspiration for innovation for bigger ideas.  Instead of engineering down products to fit the needs of the limited buying power constrained mass markets, they need to start thinking engineering up for products that shape industries in the developed markets.

India needs to develop high value industries and actively transform itself from a low-cost software and outsourcing economy to global innovation test bed. How can India learn to overcome the fear of failure? And how do they move away from thinking small hoping it will grow big?

Conversations about innovation in India with anyone always start with jugaad. Jugaad is a Hindi word that loosely translates as "the gutsy art of overcoming harsh constraints by designing an effective solution using limited resources." For them, Jugaad is an antidote to the extreme complexity of Indian societies: a country with pervasive scarcity of resources and infrastructure and good policy. Over the years it has developed a way to fixing things that are broken and mashing up different products for different usage.

Jugaad is not unique to India and they should stop putting that at the core of innovation for India. The future of innovation in India is solving bigger global problems. India can help the world to search for new solutions that do more with less for more. That is to say, they should provide more value using less energy, material, effort or time, and serve more consumers.

To be fair, it’s not just the Indian companies that are grappling with this issue. Companies in UK, US, Canada, Finland, Japan and Korea all grappling with this. Every country has a different need for innovation and needs a different strategy for innovation and not everyone needs to look at frugal engineering. Some have a steeper climb in brining design into the engineering process. By bringing together different sectors of society to think and talk about innovation in a structured manner, India can bring about a new and higher threshold for innovation thinking and practice.

Design Thinking Is A Cognitive And Intellectual Process That Balances The Rational And Emotional. Not Included With Your MBA.

What is Design Thinking? Because of the word “design” and many automatically associate it with the craft of design or design as a profession. Actually it is less to do with “design” and more with “system”. There are many ways to define "design thinking" and this list is not exhaustive:

• A way to instill customer-centricity and empathy
• A framework for exploration and experimentation
• An approach to sense-making and problem solving
• A methodology to foster exploration and experimentation
• A design buzzword to tell you a designer can do more than design
• A management buzzword sold as the “next” strategic tool
• A marketing slogan or tag line
• A self-gratifying term for those who think they are creative

The term “design thinkers” implies that designers are craftsmen and not thinkers, which is NOT always the case. It is also a stretch for traditional industrial or brand/graphic design firms to claim to be able to use "design thinking" to solve complex strategic issues. These firms need to go through a radical transformation and close a big capability gap before they can even attempt to implement it for others.

Today, "design thinking" is frequently compared and contrasted to business. This is often an over simplification that forces us into predetermined roles along with their associated rules, conventions, behaviors and formal expectations. It Is important to recognize that "design thinking" is NOT exclusive to designers or unattainable to those in another discipline. Design thinking is natural and inherent in all of us who are smart and creative.

"Design thinking" is a cognitive and intellectual process that balances the rational and emotional – in effect combining left brain and right brain thinking. When applied, it harmonizes with other modes of thinking and closes knowledge and information gaps, creating order and refining meaning. Because "design thinking" is a dynamic, constructive process that is iterative in nature, developing ideas requires ongoing definition, redefinition, representation and assessment.

To achieve those tangible outcomes, you need to open the process to multiple participants and socialize the process and outcomes, visualization is a very critical part of the process, not an outcome. Even the Department of Defence recognizes the needs to train "design thinkers" that are capable of critical and creative thinking to plan operations in dynamic environments with fast-changing uncertainties in extremely complex conditions.

People who are capable of using "design thinking" to identify and develop different military response options within the context of a big strategy are crucial to successful military operations. The development of such skills requires a shift in their focus from the operational and tactical environments to the strategic environment. This is an extremely challenging undertaking given that many military officers spend the majority of their career starting at lower levels and their advancement depends upon how well they perform tactically. This is very much like managers in large organizations who were promoted based on their ability to execute tactically.

To develop senior commanding officers with "design thinking" capabilities require DOF to train them new skills including analysis as well as synthesis. "Design thinkers" possess the ability to think critically on a "system" level; break concepts into simpler parts and mapping out their relationship and system impact before rearranging the elements into a new whole; in other words, to produce something through imaginative skills and quick experiments. And yes, imagination is always needed.

Design Thinking And Growth: What’s The Connection? Why Do We Need Growth?

The Harvard Design Thinking Semina was a great one. High quality particiapants and great turn out with beatiful New York City spring weather. Lunch on the rooftop is way better than a banquet room or a faculty's dining hall. No place on earth can beat the view of New York City. So much energy and creativity. Many participants came all the way from China, Argentina, Mexico and Korea. Thinking of the nex one outisde US, perhaps somewhere Europe and Asia?

Growth is a funny word and often misunderstood just like other words such as strategy or innovation. I have heard from people from 25 year old young smart people to 45 year old seasoned executives and often they struggle with the idea of growth. Why we need to relentlessly achieve growth and what growth means?

Growth is often perceived as a proactive (not defensive) strategy, as the Red Queen says in Lewis Carroll’s Through the Looking Glass, “Here it takes all the running you can do to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!” We're at a point that you can't run faster anymore and is close to the physical limit of how fast we can run. Both organizations and even economies. We ned to develop out talent pool to match the economy of the future and harness the full capabilities of the our human capital and technological progress and to reverse the damage we've done to the environment. Now it's time to reinvent the wheels.

Growth is perhaps the most important word on CEOs’ minds, small companies or large enterprises. Small firms want to get big and big firms want to get bigger.  Scale brings resources, market power, improving employees’ standard of living and it gives you currency to acquire.  Today, quality growth is hard to come by, and responsible growth is more difficult. Every company needs a grow strategy or you are waiting to die to be acquired or planning to exit. It is like swimming up stream a river, there is nothing call stay put. Either you swim to go upstream or washed down the river.

Philip Crosby, author of  The Eternally Successful Organization says that growth is unavoidable, "if for no other reason than to accommodate the increased expenses that develop over the years. Inflation also raises the cost of everything, and retaliatory price increases are not always possible. Salaries rise as employees gain seniority. The costs of benefits rises because of their very structure, and it is difficult to take any back. Therefore cost eliminations and profit improvement must be conducted on a continuing basis, and the revenues of the organization must continue to increase in order to broaden the base."  When a person ask you why do we need to grow? Ask him or her whether he or she is preparing not to have any promotion, personal development and increase in income and responsibility for the next 10 years.   If a company stop growing, there won’t be opportunities for everyone. Period.

The challenges are 1/ How to grow responsibility? 2/ How to grow purposefully? 3/ How to ensure your growth is sustainable? That’s where design thinking comes into play.  Design thinking can help create a compelling story of the future, anchored on the needs of customers (and societies) and bring a future orientation on strategy development and an empathetic manner to how company think about its customers. Through storytelling, we can unveil the aspirations and natural inclinations of an organization and we can get a sense of what feels right. The story of a company is what can truly determine its value, and the right story will always be more substantial than the right strategy. This is primarily because strategies are susceptible to the ingenuity of competitors, disruptive industry shifts and bad luck, while stories are impervious.  

Spreadsheets and power points don’t tell story. The Design Thinking approach believes that stories are fantastically useful in their ability to bring people onto the same page (unify attention), organize information and present it in an efficient and easy to access manner. Stories help organizational stakeholders access and understand the logic, reasons, motives and intent that surround a potential vision or context for growth. Stories can help reveal the choices presented to an organization, its possible behaviors, courses of action and their potential outcomes. Perhaps most importantly though, stories significantly improve cognition and comprehension. A well-crafted story or narrative can help make contexts and strategies for growth more accessible so they can be questioned, debated, shared and recounted.  

So what’s your growth story? Not only your company needs one. Amercia needs one. And every country needs one too. Design Thinking can help goverments and cities to rethink growth and development which mostly comes from productivity growth, which reflects multiple factors — but the biggest factor is technology.Yes tehcnology is the key driver of grwoth.

Indeed, the dominant role of technological development in economic growth has been well-documented ever since Nobel Laureate Robert Solow published his seminal paper in 1956, “The Economic Record,” which demonstrated that technological progress drove at least 80% of economic growth in the United States between 1909 to 1949. That's why I have faith in the US economy because the US is still the most technologically advanced country in the world. At least for now.

Now Everyone From Samsung to Nokia and LG Is In A Perpetual Competitive Race To Get The Next Gadget Out In The Market. It Is Becoming Crazy.

My last stop before heading home is Seoul, a few more meetings and I am ready to head back. Only today I managed to take a few hours off and visited some art galleries. Korea is really trying to become a key player in the world of design, so much goverment money is pouring into supporting the industries.  The emphasis on design is very much focused on industrial, brand and graphics and not a higher leve of design thinking and applications. They are at least 5-7 years ahead of China and Taiwan. They should be starting from understanding that the design is not only part of industrial/economic policy but a strategic capability to affect all areas of industries and national competitiveness.

For those of you that are gadgets lover, we’re stuck with a constant upgrade cycles and every 6 or 9 months we ask ourselves the question: Do we the new iPhone 5 or iPlate or iGlasses or the new Blackberry Torch or Thunder or Storm? The strive to do more with gadgets and inventing new features and functions and even applications are making our life easier, but not most of the time. These companies are, and will forever be, in a perpetual competitive race to release the next gadget, phone or software that will revolutionize (and complicate) our lives.

Retailers, consumers and carriers are all stuck in between their wars in this age of technology. Nowadays, technology is evolving at such a rapid pace that causing many companies to win fast and lose fast. The game of business is now like currencies trading and highly leveraged. There are no signs of any slowing down. I think at some point it will hurt PC and netbooks will be obsolete. Chocolate Agency (China) will be introducing the futuristic mobile phone that is green and beautiful. Samsung, Nokia and LG phones will intensify the innovation battle, Motorola is trying for a comeback.

Everything here is all touch; everyone I’ve seen the last two week in Japan and Korea is using some touch phones. Samsung launched a full-touch cell phone "Nori" designed for women. The product's name Nori is from the pronunciation of a Korean word, which means play. Typically Asian style, the exterior of the phone reminds you of a cute toy. You can put character stickers on both front and back of the phone, and 3D motion photo function enables you to convert 2D pictures to stereo ones.

And LG launched the first full-touch cell phone "XOXO" with the highest resolution for female consumers that featuring a collaboration with the fashion brand "Lovcat". A heart which is the Lovcat's symbol is printed on the case. It is the attempt to position the phone as more of a designer bag. Very Asian idea but will work here.

And then there are other addons one such as the ZTE Peel available for $80. The Peel is a custom-developed case for Apple's iPod Touch that adds 3G radio capabilities to the Touch, but no voice services. The Peel connects to 3G data network and creates a Wi-Fi mobile hotspot, allowing the iPod Touch and one other device to access the Internet via Wi-Fi. No contract is required. It is compatible with Windows and Apple computers, and offers up to 3 hours of battery life. Want to see one that adds Voice capability to iPad.

Japan's Structural Barriers To Innovation Is Hurting Them. Korea And China Are Just Around The Corner Ready To Take Over.

It is nice to be back in Japan this week although I am just here for 3 days and off to Seoul. Went to this restaurant in Subuya,impressive design where the kitchen is raised and opened like a theater and the manager is the conductor. Although he looks more like a headmaster standing on a podium. I wish the chefs can come out and sing a tune or two once 30 minutes.

I used to spend a lot of time in Tokyo 15 years back and it was probably the most innovative city in the world for a long time. Is this still the case? I don’t think so. Many ask me the question why is Japan so innovative and at the same time so conservative? Obviously many top Japanese companies are struggling with the speed of change outside Japan as well as the switch to software-based competition. As a gadget geek, Japan was a paradise I don’t find much excitement these days when I walk the streets of Akihabara, I feel they are now years behind the curve. May be because I am ahead of the curve or my expectations need to be managed.

Here I define innovation as "the application of knowledge in a novel way, primarily for economic benefit," Japan, Switzerland, the United States and Sweden used to the top, I think Korea and China is quickly moving up on the list. Japan as a resource-poor economy has long taken an 'innovate or die' approach, but the legacies is hurting them. China is not the second largest investment in research second only to the US, and Europe is still in a catch-up.

Things are doing wll here. At least this chain of used goods department store are growing. This is the first in the world I think. Why Japan struggles with innovation? It is not the lack of technical expertise, hard work or creativity.

First, there is the curse of large domestic market and combine with intense local competition, the executives of these large Japanese companies cannot afford the distraction. Second, many of the mental models of design in Japan do not transfer to overseas, it is basically exporting the Japanese behavior and hopefully it will be picked up elsewhere. And third, the obsession with quality has prevented many Japanese companies to successfully compete time-based. Plus the country’s working population is shrinking daily and has the oldest population on record. The people are living comfortable but not as rich as they were in the 1980s and domestic consumption was once the lifeblood of the Japanese economy. Manufacturing (hardware) is moving overseas to China, Thailand and Malaysia and the components are from everywhere. The high value work are the concept development and interface/software design, US is still the leader. South Korea has usurped Japan's seat as the leading consumer electronics maker or on its way.  I think all Japanese consumer electronics giants need to seriously rethink their long term strategy, reimagine their future, restructure and reset.

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.

"Corporate Repsonsibility Is An Illusion?" According To Prof Karnani. What Is He Thinking?

This is an argument that will not go away anytime soon. I have had heated debate in our b-school days way back.The question goes back to the core of the modern corporation. What role does business plays in creating value in societies? Or the question should be more about the ‘how’? Among B-schools there are many different point of views on what is a modern corporation.

CSR is becoming a buzzword much as social media. There are many real experts and many wannabes. Why the rush now? Well, the answer is simple, with all those money thrown into advertising whether targeted at institutional or retail investors in WSJ or general public adverting on cable TV, they are almost a total waste of money. Net net, people don’t trust large corporations. Period. This is not even a question of brand value or equity, it is simply difficult for companies to communicate anything—without the trust. Not to mention asking for a price premium.

So how have some companies joined the socially responsible bandwagon? We first launched the Aviva Change Fund 2 years ago with stellar success, followed by Pepsi launching of its Refresh Project. There are many campaigns out there these days and now everyone wants to be like Petagonia. Marriot utilized giving a washer basket from World of Good – a social enterprise helping overseas artisans create more sustainable lives. Liberty Mutual’s campaign with the theme/slogan 'Responsibility'. You have probably seen some of the television spots depicting everyday Americans confronted with a decision to do the “right” thing or “look the other way.” (For full disclosure, Pepsi, Liberty and Aviva are all current clients of Idea Couture).

CMOs are very enthusiastic and are convinced CSR is the answer to customer engagement. The role of CSR in marketing and branding is undeniable and its importance will grow for sure. But what about CSR in business strategy?

I remember in my business school days I had long debates about the role of business in societies. 35 years ago, Milton Friedman wrote a famous article for The NY Times Magazine with title aptly summed up its main point: “The Social Responsibility of Business Is to Increase Its Profits.” The future Nobel laureate in economics had no patience for capitalists who claimed that “business is not concerned ‘merely’ with profit but also with promoting desirable ‘social’ ends; that business has a ‘social conscience’ and takes seriously its responsibilities for providing employment, eliminating discrimination, avoiding pollution and whatever else may be the catchwords of the contemporary crop of reformers.”

I seemed to share the same point of view then but since then my views have changed. I am not a socialist by any definition at all, but I think what is missing is the humanitarian dimension of capitalism. I am not fully convinced that a corporation role of adding value to societies is not just maximizing profits and then perform philanthropies. The order should not be that way; it is not about making tons of money at the expense of the planet and then figure out how to put money in fixing it. This is not how it should work. They need to put people and planet not ahead of profits, but aligned with profits. I believe that the enlightened corporation and CEOS should try to create value for all of its constituencies including investors but not excluding everything else.

I admire companies that make good profits, usually those are the results of continuous innovation, operational efficiencies, strong leadership and great brands and I am not hostile to profits and shareholders. In fact, I believe in relentless pursuit of profits. But I believe good CSR is good for profits.

A recent WSJ report suggested otherwise. Aneel Karnani, a prof at the University of Michigan's Stephen M Ross School of Business, believed the idea that companies have a responsibility to act in the public interest and will profit from doing so is fundamentally flawed.

He argued that CSR is an illusion, and a potentially dangerous one. Very simply, in cases where private profits and public interests are aligned, the idea of corporate social responsibility is irrelevant: Companies that simply do everything they can to boost profits will end up increasing social welfare. In circumstances in which profits and social welfare are in direct opposition, an appeal to corporate social responsibility will almost always be ineffective, because executives are unlikely to act voluntarily in the public interest and against shareholder interests.

I think his views are very narrow and dated. The answer lies in what kind of executives we are breeding today for tomorrow. It is all about maintaining that balance. CSR is an unstoppable movement against the public outcry over corporate malfeasance (you don’t need to agree with me). CSR means building sustainable economic development, sustainable societies and sustainable consumer lifestyles, the collective mission is to rethink and rebuild an economic system that is in balance with the natural world. You can’t have two worlds. Business and the rest.There is only one world.

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.

Innovation Is Badly Needed For Non-lethal Weapons? How About The Weaponization Of Drugs And Music?

Between the G20 and World Cup, everyone is busy. The economic inconvenience to Torontonians, security costs paid by taxpayers and businesses disruption are the price we paid for 3 days of meeting. This meeting is not changing fate of the world, in fact, I don’t think there is plan, I mean a real one. The economic, environmental, social and geopolitical issues we are dealing with are unprecedented and the world has changed so much that many macro economic theories are not holding up.

The outcome of the meeting? It is a draft document that includes new wording such as "voluntary, member-specific approaches – meaning we all do our own thing for what’s best for us. Not sure why they can’t do a webex and the money can be used to solve some of our social problems, instead of talking about it. What can $1B buy? It is more considering individual country paying for their cost.

And for those peaceful protesters, I feel sorry for them for their voices not getting heard. I also feel sorry when there were thugs mixing in and all they care was breaking windows. Not sure those people know what they want. And for the police, they are dong their job. And it is hard for them to identify who is who in the crowd. May be there needs to be some innovation here.

How about a visual tagging device that can target these thugs or their leaders and use special non-lethal weapons on them? OK what non-lethal weapons? Back in early 70s, Polish writer Stanislaw Lem portrayed a future in which civil disobedience can be controlled with hypothetical mind-altering chemicals dubbed "benignimizers". Lem's fictional work opens with the scary story of a police biochemical attack on protesters. As the environment becomes saturated with hallucinogenic agents, protesters descend into chaos, overcome by delusions and feelings of complacency, self-doubt, and even love. It works better with the right music.

There is a US report currently in public domain that explored the advantages and limitations of Calmatives for non-lethal use, the report revealed a shocking Pentagon program that is researching psychopharmacological weapons. The report concluded that "the development and use of psychopharmacological weapons is achievable and desirable." The research team, which is based at the Applied Research Laboratory of Penn State University, was assessing weaponization of a number of psychiatric and anesthetic pharmaceuticals as well as "club drugs”. They can be delivered by spraying directly or through other agents.That's a real innovation, weaponization of drugs and music.

Most of the drugs under consideration are basically depressants affecting the central nervous system. Most are synthetic, some are natural. They include opiates (morphine-type drugs) and benzodiazpines, such as Valium (diazepam). Antidepressants are also of great interest to the research team, which is looking for drugs like Prozac (fluoxetine) and Zoloft (sertraline) that are faster acting. Scary thoughts but anything is better than bullets if we pick the right drugs. That’s a new adjacencies for those failed drugs that carry funny side effects to find a second life.

Here’s the funny part, the report points out that pharmaceutical candidates that fail because of excessive side-effects or unattractive side-effects... wonder what kind of scenarios if we spray people with happy drugs while playing John Lennon music loud on the streets. "All we're saying, give peace a chance"

Is The Age Of 'Indovation' And 'Chinovation' Becoming Real And What Are The Threats To Established Global Companies ?

‘The age of ‘Indovation’ dawns’ - this headline from Financial Times caught my attention while I was sitting on a plane flying out of New Jersey. It is an interesting article about Armin Bruck, managing director of Siemens in India, trying to convince the board of the Siemens of the potential of Indian innovation. He gave them the keys to a Tata Nano to convey the “smell and feel” of a revolutionary mass market product and to persuade his company that it should improve its pipeline of local inventions aimed at Indian consumers.

So, in February, Peter Löscher, the company’s chief executive, and his colleagues Heinrich Heisinger and Joe Kaeser piled into the world’s cheapest car – priced at $2,000 – and drove round New Delhi. I think the same can be said about ‘Chinovation’. Innovation from emerging economies will change the dynamics of global competition and forces every company to rethink or reconfigure their strategy for developing its high-quality technology for low-cost emerging markets. Good quality and low cost products with advance technology will becoming an important battlefield between global companies and local companies in India and China.

FT reported that after three months of that February visit, Siemens had declared publicly its intention to develop more than 80 “base level” products – targeted at financially constrained mass markets – with an investment of €3bn in India, China, Russia and Brazil over the next 3 years. Siemens expects to raise its order book 10-fold in India from these redesigned products during the next decade to €1bn a year. It also foresees double-digit profitability from the low-cost, high-quality strategy – what in India is called “frugal engineering”.

China understands the accelerating competition and the need to develop high value add industries, China is actively transforming itself from a low-cost manufacturer to global innovation test bed. The manufacturing base big domestic market give them a competitive advantage, but China’s companies still face tough challenges in their quest to move up the global value chain, and they still have a long way to go, but need to move fast.

In short, Chinese companies don’t understand ‘innovation’, let alone innovating beyond manufacturing. The idea of a ‘customer’ is still pretty foreign to Chinese companies and to understand how to embed empathy and user needs to help innovation is a long way away, because of cultural differences as well as business management mind set. China today does not have the talent base nor the culture for design and innovation at the corporate level, developing leadership skills is vital to close those gaps, and at the same time be able to attune to the end user will open vast new opportunities for consumer-centric innovation. It is at least 10 years away.

The concept of creative industries (happening in Shanghai and Beijing but not much outside these two big cities) in the context of China raises important issues, they have been trying to develop the creative industries with Chinese characteristics, but there are plenty to be done on intellectual property and copyright protection, design education, regional and enterprise development, consumer activism, and the fundamental tensions within the creative industries between individual design creativity and industrial scale. Only if the barriers are crossed otherwise the creative industries will no more than just fringes. 

But the trend is unstoppable and it is a serious threat for those companies in the west such as the Siemens or GEs of the world. Siemens understands the threat and is acting fast.

The Future Of Sustainability In Design Is Invisible. Idea Coutue's Patrick Glinksi Presented Three Snapshorts Of The Future At The Sustainability Brand Conference.

The Sustainability Brand Conference 2010 in Montery California last week attracted over 700 leading sustainability, brand strategy, product design and communications executives from top global brands as well start-ups, NGOs to share ideas and green practices.  Idea Couture's Head of Social Innovation Patrick Glinski was speaking on The Future Vision: 3 Snapshots of the Possible. Patrick’s key messages for the audiences are:

• We need to talk to our customers more often.
• We need to communicate a message of improvement rather than perfection in our attempts to be sustainable. This was echoed in several other sessions, including Starbucks (who gave themselves a needs improvement ranking on their ability to meet their 2015 target of 100% reused or recycled cups).
• The future of sustainability in design is invisible. Sustainable choices are made by brands and built into products as part of the design process and supply chain.

Patrick also co-presented with Rob Kaplan from Brown-Forman where Rob talked about the Jack Daniels American Forest program and Patrick presented the design and implementation process from the Aviva Community Fund.  Patrick top five take aways from the conference:

• Organizations need to focus on innovations in sustainability. But from the outsiders perspective, most talks took the position that innovation is easy - a fact that we know at Idea Couture is simply not true.
• There is a strong economic impact that results from sustainable practices. But in selling through the idea of sustainability to the C suite, most sustainability practitioners focus on social impact rather than rationalizing financial impact first.
• Strategic sustainability (solving social needs within the core business, leveraging the assets of core business, and forcing innovation through impossible constraints) will be a major economic force in the near future.
• Being sustainable is no longer a significant differentiator for your brand since most organizations are including some form of sustainability / green / pro-social messaging as part of their value. No one is going to pat you on the back for following regulations.
• It's ok to be profitable by doing good. But unless you're transparent about your intentions, you're going to deal with a lot of doubt. Transparency is becoming a key factor of building trust with customers.

I guess the biggest myth in sustainability in business that there's no money to be made from sustainability or being seriously green. This is definitely true ten years ago, but not the case today. It should be part of any company's business strategy, not just marketing strategy. Sustainability innovation offers brand opportunities for both top and bottom line benefits and build brand equity. Sustainability not only involves cutting down on waste and carbon, it many instances there are opportunities to support economic development for developing markets.  Innovative companies have found they can resell used products and materials that were formerly considered waste and help support micro-enterprises.

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

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

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

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

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

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

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

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