innovation playground Idris Mootee

Introducing The 4P’s of Management: Peanut, Peter, Penis, and Perfection.


I used to interview between 200 to 350 fresh MBA grads a year, and many barely understand the basic principles of management let alone strategy and organization design. Most people developed some functional skills attending B-schools but most fail to develop a senior management perspectives despite those case studies method of teaching. Here’s the 4Ps that they need to teach in B-schools.

Here’s the Management 4Ps which I invented to train young managers: The Peanut Effect, The Peter Principles, The Penis Theory, and The Perfectionist Syndrome. If you have not heard all or any one of them, don't worry.


The Peanut Effect can be best described when referring to the lottery. The main reason why so many people play the lottery is because they place disproportionate weight on small probabilities. People don’t realize the true cost of a lottery ticket is a “peanut” and they don’t realize how the cost adds up over time. The same can be applied to buying snacks, coffee, magazines and other “cheap” items. If you are marketing your product or services, what you can learn from this is that you need find a way to emphasize the big benefits even if the probability to reap them is low. This can apply to bringing a vision to the company. Think big. Think possibilities and not only probabilities.

The Peter Principle is a belief that, in an organization where promotion is based on achievement, success, and merit, that organization's members will eventually be promoted beyond their level of ability. The principle is commonly phrased, "employees tend to rise to their level of incompetence." In more formal parlance, the effect could be stated as: employees tend to be given more authority until they cannot continue to work competently. It was formulated by Dr. Laurence J. Peter and Raymond Hull in their book The Peter Principle, a humorous treatise. Make sure you promote people to a job that is beyond their level of ability no matter how they try to justify the case. It doesn’t matter how long people have been on a job, sometimes younger manager can rise to the challenge in a shorter time. Experience helps .. but not always.

The Penis Theory is about finding your core. Penis envy in Freudian psychoanalysis refers to the theorized reaction of a girl, during her psychosexual development, to the realization that she does not have a penis. Freud considers this realization a defining moment in the development of gender and sexual identity for women. In contemporary culture, the term is sometimes used metaphorically to refer to women who wish they had a penis – lucky you don't need one to succeed in business. What you can learn from this is that too many marketers are spending too much time trying to be someone else. Often companies try and emulate the “big-wigs” and try to be like Apple, Amazon, or even Google. These companies however are spending too much time and too many resources trying to be something they are not.  It is more productive to understand who you really are – and what’s your core?

The Perfectionist Syndrome is common among high performance workplace. I have come across many high performers who are perfectionists – but not perfectionists in the true sense because when you look at their work, it is evident that they are too afraid to make calculated mistakes. And as a result, they often reach a performance ceiling. Perfectionism muffles our ability to hear, listen and learn and what you can lean from this is that perfectionism is impossible.

Let me tell you the dirty secret of management – forget about in search of excellence. There’s not a business anywhere in the world that is without problems or a business model that is perfect. Business is complex and imperfect. You can make a spreadsheet perfect but not the financials. Every business is managed by imperfect human beings and exists by providing a product or service to other imperfect consumers. Empathy makes up for the imperfection. Business is not a machine.

Is Design Thinking Built-To-Last Or Just Another Management Fad?

I have been teaching and practicing design thinking for business for the almost ten years and over the years I saw the growing interest of design thinking among both business and design communities. Take away the aspiration side for now including notion such as design thinking to change the world etc., design thinking in business is barely understood let alone bring practiced widely. This is the time when businesses have been desperately looking for the next big thing - think the management “wonder drug”.  Lets put some thought into this, is “design thinking" helpful or is it just a hype that is exporting the dogmas of design to business strategy? Design industry is having their own set of big issues.

What's Design Thinking? Design Thinking bascially refers to the methods, framework, tools and processes for investigating ill-defined problems, acquiring and visualizing insights, synthesizing knowledge, and imagining solutions in the design and planning fields. As a style of thinking or a method of creating solution, it is generally considered the ability to combine empathy for the context of a problem, creativity in the generation of insights and ideas, and rationality to analyze and fit solutions to the context.

While design thinking has become part of the popular lexicon in industrial design and engineering, its broader use in describing a particular style of creative thinking-in-action is having an increasing influence on 21st century education across disciplines. In this respect, it is similar to systems thinking in naming a particular approach to understanding and solving problems.

Buchanan’s (1992) paper “Wicked Problems in Design Thinking” shifted design theory away from its legacy in the world of craft and industrial production towards a more generalized “design thinking” that could be applied to nearly anything. I mean anything, whether a tangible object or a complex system. Drawing on Pragmatist philosopher John Dewey, Buchanan saw design as a liberal art, uniquely well-placed to serve the needs of a technological culture in which many kinds of thing are designed, and human problems are complex. It is basically instilling new perspectives to look at a problem and frame them in different ways to provide more options to tackle whatever the problem is.

And for Design Thinking in Business - The very core of many management theories are being questioned and “management” is close to a point of failure or needed serious reset. Business leaders are looking to find something new to grasp onto in order to make sense of what’s going on and are looking to organize for a future of unprecedented uncertainties. Design Thinking brings a refreshed, revitalized, and rejuvenated approach to management and strategic thinking- but design thinking is far from a cure-all. Innovation, strategy and leadership are closely interconnected and to succeed you must have all three. Innovation is the ability to differentiate options for the future and develop a set of perspectives to guide them there. Strategy is the ability to connect customer needs and wants to the corporation’s core capability, economics and leadership is the ability to instill a sense of purpose for the organization and to mobilize everyone to work towards a common goal.

I don't think Design Thinking will end up like other short-lived management fads and it will eventually deeply embedded in what we called 'management' today and it will help connect the three: Innovation, Strategy and Leadership.

What Is The Right Organization Design For Your Corporation? And What Test To Use To Know If You've Got The Right One?

Innovation effectiveness is closely linked to organization design. In the past, most organization design objectives were driven by a need to improve efficiency, resource sharing and improving focus. It is not common to see innovation as the core driver or organization design to improve speed, creativity and agility. Many organizations struggle to 1/designing the organization and available options 2/understand the implications of different design option 3/making the decision among different organization design models. So what are the factors that should guide the choice (and criticality) of organization design?

There are many rules of thumb about things such as spans of control / empowerment and cross functional/business units reporting relationships and revenue and cost allocation.  There are many theories on organization design but not very useful in guiding organization design decisions. Even if you’ll have 2 or 3 different options on the table, you still need to figure a way to make the big decision? What I advise companies is use the following test when prototyping organizational design. It is both a logical exercise as well as a creative exercise and requires serious prototyping, not moving boxes in a power point.

The Future Test: Does that design reflect the needs for how a company thinks and tthey plan to compete in the future and not just replicated an existing org design taken from another company.  And how does the org design help create some competitive advantage? How future proof is the design?

The People/Culture Test: Does the design adequately reflect the motivations, strengths and weaknesses of the available managers and staff and the organization purpose?

The Competitive Advantage Test:  Does the org design allocate sufficient management emphasis to the strategic priorities in any specific product/market spaces or chosen boundaries?

The Corporate Parenting Advantage Test: This one applies when there are multiple business units and each unit is being looked at individually before holistically. Does the design allocate enough attention to the intended sources of added value and strategic initiatives of the parent or holding company?

The Power Test: Does the org design provide the desired allocated power to groups/individuals that is linked to the strategic value of the unit or functions? Or does it leverage the strength of groups/departments that can positively drive performance beyond its direct influence.

The Agility Test: This addresses whether the org design provide the adaptability and increase speed to respond and allow having the agility to adapt quickly to future changes?

The Market Perception Test: This address how the investment communities perceive the motive and benefit of the redesign. It is important (for public company) that investors and analysts buy into the needs as well as the outcomes.

Organization design is not a pure rational exercise. What is a good organization design?  You won’t know when you finish designing; the prototyping of organization design is tightly linked to employee engagement, strategic futures and organization purpose. It takes some experimentation before getting it right. At the end, its goals are to improve all of the above. The tests provide a good starting point to look at organization design requirements. That’s where Design Thinking comes into play.

Design Thinking Requires Storytelling. It Is Both An Insight Tool And An Organization Culture Building Tool.

 
Stories inspire, motivate, and shift the way the people think and work. Many civilizations throughout history understood the power of storytelling. From ancient Egypt to modern China story- telling provided the foundation for nearly everything. For business, often there needs to socialize strategies within executive management, the board and senior staff and they include telling innovaiton, survival and hero/heroine stories. Most survival stories are around when organization had to overcome big challenges from disruptive business models that threatened its existence. It is an important piece of organization culture building.

There are a few universities offering storytelling degrees. I believe Columbia University offers a BA in storytelling an mythology and East Tennessee State University offers MA Storytelling, one of a select few fully accredited graduate programs in Professional and Applied Storytelling. All MBA should include a module for this.

From our daily routines to historic events, storytelling can be the best tool to uncover insights. Historians use storytelling to draw out the facts – and it can be used in the modern corporate world too.

Storytelling has been used as an insight tool to give idealized accounts of ancient life. Sometimes drawing from events and at other times drawing from art itself. When I was in Egypt, I learned about the poems found in an excavated workers' village on the outskirts of the Valley of Kings. These poems contain insights into the life of ancient Egypt – a window that can still shed light on ancient life.

In Japan, Kamishibai was a popular form of visual and participatory storytelling that combines the use of hand drawn visuals with the engaging narration of a live presenter. ‘Kami’ in Japanese means ‘paper’ and ‘shibai’ means ‘play’ or ‘drama.’ The presenter stands to the right of a small wooden box (call it a mini stage) that holds the 12-20 cards that feature the visuals that accompany each story. The presenter changes the cards at the speed that matches the flow of the story he is telling. Today, this type of performance is rare but the essence of what was achieved is still alive and well – to capture the audience with a story.

Anthropologists and ethnographers have long been using storytelling to communicate findings. By painting a picture of a situation, the insights gleaned become clear and understandable. Not only used to communicate the findings, anthropologists use the method as part of the research as well. Individuals are asked questions and in return, a story is told. CEOs are telling stories everyday from painting a future to crystalizating emerging market opportunities.

Despite the universality of storytelling, many research professionals that use classic research methodologies for qualitative and quantitative studies are reluctant to accept storytelling as an insight tool and some may be skeptical about how storytelling can be beneficial in applied research.

A few tips to keep in mind if you are willing to embark on a new story. First it is not about the number of stories that correspond to a particular segment; it is the quality of the stories. There is no need to be overly concerned about the factual accuracy of the story. And second, the focus should never be around the discussions. While it may be useful for the researcher to understand the questions in the client’s mind, a discussion guide is only useful in a limited sense. At idea Couture, storytelling is considered a leadership skills as much as it is an insight tool.

 

Five Critical Questions About Organization Culture That People Avoid Asking.

There is a piece on HBR Blog on the topic of organization culture “Culture Takes Over When the CEO Leaves the Room” by Frances Frei and Anne Morriss (both HBS professors). It is a good piece worth reading and here's an summary of their ideas:

Excellence = design x culture. Your job as a leader is to get both right. You must build a winning structure for your organization and then foster the often unspoken rules and values that will bring that structure to life.

But if we may be blunt for a second, what the hell is culture? And how exactly do you get any better at it? In short, culture guides discretionary behavior and it picks up where the employee handbook leaves off.

Culture tells us how to respond to an unprecedented service request. It tells us whether to risk telling our bosses about our new ideas, and whether to surface or hide problems. Employees make hundreds of decisions on their own every day, and culture is our guide. Culture tells us what to do when the CEO isn't in the room, which is of course most of the time.

My favorite line is “Culture tells us what to do when the CEO isn't in the room.” I have been studying the ‘creation and nurturing” of organization culture for decades looking for practices and patterns among organizations with highly effective and sustainable cultures. Especially those that were not built on incentives such as stock options and those that were transnational.

It is easy to just look at those service intensive companies (Four Seasons, Starbucks, Zappos, Nordstrom and Southwest etc.) where there is close relationships between service and culture, but I am more interested in looking at culture and their relationships with strategy, structure, purpose and their implications on business performance and innovation effectiveness. Some of the questions I have been exploring include:

• The first question is does the CEO or the executive management knows what kind of culture they’re trying to build or what are the conditions required for those culture to flourish and key concepts to build from? Or it is simply unintended consequences of the CEO management style or something inherited from previous management? Do you know what you're building towards?
• The second question is can a company articulate its corporate culture in a way that is both tangible and explicit. A company publishes an annual report about its financies, should they publish a book about the company culture? A company’s prevailing values, mental models, assumptions, attitudes and beliefs all make up the soft, invisible stuff of culture that crate an environment of trust and balance. It determine its outlook—what it finds meaningful and important. Can you capture these stories and communicate them in a tangible way outside a Power Point? And what are the best practices to do this?
• The third question is when company is attempting a culture transformation; do they need a vision of what they want to become? Is there a genuine need to diagnose their present culture so that they can define the current state and the future state? And if the gap is too big, how do they know if the transformation is too drastic and simply not achievable?
• The fourth question is when organization culture gives people a sense of self and identity and determines, rituals, beliefs, style, meanings, values, norms and language, the way in which ‘things are done that way around here’, who should own it or is it possible for any function to own?
• The fifth question is around maintainence. An empowering executive management team can better assess the current status of an organization with an eye to shaping /modifying / eliminating the parts that are dysfunctional or ineffectivel, then replacing them with qualities that will improve the speed of decision making, productivity, and employee engagement. Corporate culture needs a maintainence plan. Do you have one?

Organization culture is not a vision, mission or management system. It is the strategy that guides how a company makes decisions disregard of what industry they compete in or where they play along the value chain and how decisions are made when the CEO is not around. And in particular today’s fast pace turbulent business conditions, a strong corporate culture can provide the strategic agility and empowerment needed to reduce the recovery time from any unavoidable setbacks or disruption.

Organizaion culture is the glue that holds a company today, even when lacking a robust business strategy. Far too many CEOs and executive leadership fail to make the connection between a “hard” strategy and a “soft” strategy and not putting enough effort to make creating, building, and nurturing a winning corporate culture the heart of the company strategy.

“To be an enduring, great company, you have to build a mechanism for preventing or solving problems that will long outlast any one individual leader.”           

                                                                - Howard Schultz

"We needed to integrate as a team inside the company so that we could integrate for the customers on their premises.” 

                                                                - Louis V. Gerstner, Jr.

Strategic Innovation And The Quest To Reinvent Management.

I spoke at a number of conferences the last few weeks on the same topic of Strategic Innovation in the Age of Reinvention. Reinvention is the word as every individual, practicing professional, multi-nationals, non-profits, education institution and government ought to be thinking about “reinvention”. We desperately need to “totally reinvent ourselves” in order to transform our economy, organizations, politics and societies.

Corporations adopted strategies 20 years back to outsource their production and resulted in loss of ability to innovate and compete. Many corporations cannot even define their core and what they are really good it today, their perceived competitive advantage was merely channel assess and a warehouse of intellectual property and patent documents.

Business leaders and governments are also experiencing a profound crisis of trust and legitimacy and all these factors have triggered a loss of confidence in traditional ways of doing things. The new world of reinvented strategic management requires applied design thinking across all management functional disciplines.

Today the very core of many management theories are being questioned and “management” is close to a point of failure. Leaders are looking to find something new to grasp onto in order to make sense of what’s going on and are looking to organize for a future of unprecedented uncertainties. Companies that fail to make the transition and missing industry breakpoints will be forced to play catch-up or risk being irrelevant or extinction.

One of the problems is we are still training our managers (MBAs) based on theories developed in post-Wold War II which was adequate when there were very little competition and technology was not a key drivers of competitive advantage. The M-form organization design is functionally oriented and the idea is every manager should manage a piece of the business as if optimizing each function means optimizing the whole. They are specialists and as as a result everyone is sub-optimizing the whole. Resulting in turf battles, lack of collaboration and unhealthy internal competition that causes satisfactory underperformance.

The strategic process occurring when the organization already realizes that it is facing an immdiate crisis, usually leads to strategic plans in the way of drastic cost reducing changes - closing of plants, cutting down of manpower, cancellation of investment plans or a change in their direction. These actions can only help them temporary. These are no changes in the present cognitive frame of the organization and these efforts may only enhance the sliding of the organization toward its doom.

The new world of reinvented strategic management requires applied design thinking across all management functional disciplines. The very core of many management theories are being questioned and “management” is close to a point of failure. Leaders are looking to find something new to grasp onto in order to make sense of what’s going on and how to organize for a future of unprecedented uncertainties. Companies that fail to make the transition and missing industry breakpoints will be forced to play catch-up or risk being irrelevant or extinction.

Success For Organizations Comes From The Ability To Drive The Strategic Transformation At The Most Critical Points. “Business As Usual” Is A Very Dangerous Expression These Days.

What is "Strategic Transformation?" For some, it is the framework and process of altering the way in which an organisation does business using new technologies and processes. For others, it is the effort to develop a measured, goal-orientated response to marketplace events, or to improve performance by becoming more customer-centricity. But the most stratgic reason is the design and execution of an integrated, future-oriented, enterprise-wide program aimed at moving to an improved future and achieve stretch goals.

In the multitude of voices and noises, strategic and organizational paradoxes, CEOs and their executive team need to learn to navigate, transition and lead their organizations into a new future. Companies that failed to transform their organizations because they put too much emphasis on tools and technology and not enough on foresights, mental mindsets and leadership behaviors. Their leaders failed to develop the shared visions, values and beliefs that serve as foundation for dynamic culture and to engage all employees to co-create the new culture and to provide opportunities for them to initiate and participate in a shared destiny.

They need to start by identifying the specific beliefs and practices that need to be changed, challenge them to create new “experiences” that form those new belief. Convincing someone to change is hard and trying to convince and mobilize a large organization to change is an almost impossible task. But it is still possible. You just need to know where to start and where to push and pull.

There are many reasons why transformation efforts failed, because they over emphasis on the business processes redesign and not enough attention on the underlying human behavior. Strategic transformation is not just about helping people to rethink and reflect on the past and the present; it is also a way to prepare people for future unknowns.

The heart of any transformation lies in finding and embedding the “purpose” of the business and what they individually must do to accomplish that purpose, how to build trust, create networks and innovate. In the course of Idea Couture six years journey of helping large companies to transform, we determined that to create a new level of performance or jump back into a growth mode, a few things matter most. Most transformation will include building a culture of purposeful innovation and high performance. They consist of the following core components: mental mindsets, purpose and meanings, innovation practices, co-creation and measureable results.

When mental mindsets are anchored on a perspective of the future and the executives, board of directors, managers and employees are all aligned, they generate managerial actions that, in turn, lead to superior business performance. An exciting future state and here executives can leverage this to create the cultural momentum that is critical to ongoing innovation success. This cultural capital can help companies to deal with the ambiguities of technological disruptions and external market uncertainties and to direct their energy to adapt to fast changing competitive conditions. Facing increasing complexity applying a single-dimensional focus is absolutely fatal. And any attempt to emulate a successful strategy of your largest competitor is also fatal.

Transformation leaders understand the importance of using “strategic foresights” to help their companies maintain relevancy to the future and it is an ongoing attempt rather than a one-off exercise. Transformation leaders also understand the need to invest a disproportionate amount of time in bringing the organization together and function as one, not as departments or business units that ended-up sub-optimizing the business performance.

Executives in lower-performing organizations complain that they don't have time for the "soft stuff" and needed all the attention for a real business strategy. Yes we need a strategy on where and how we compete and what part of the value chain we can leverage and how to leverage from the economics of scale and scope. Executives are sometimes confused about managing conflicting strategies and they think they have to make difficult trade-offs. It is 100% possible to manage two conflicting strategies without keeping them apart. But to do so first required to develop a strong culture of trust and the ability to accommodate a new management mindset. That's why trasnformation is needed.

Successful Business Transformation Requires A New Logic To Handle Ambiguity And Change.

The future is scary and there are reasons for it. I have been giving a lot of keynotes lately to different professional organizations and senior executive roundtables and my keynote topic of strategic innovation and design thinking went beyond innovating to find growth and adapting to new economic, market, political and social order. I shared ideas on the future of economic development, the come-back of manufacturing, developing glocal innovation networks and creative or self-destruction of old establishments and the renewal and transformation of the modern enterprise.

There were never ending questions from the audiences on these topics. I can write a book on them, I guess I won’t have time. I hardly have time to get enough sleep. Everyone is looking for a theory to anchor. The future has never been so uncertain and almost any economic theories invented decades ago has become another working white paper again. The very old ideas of management and strategy taught in b-schools are so dated and when I look at the 800+ management books I have on my bookshelf, I am guessing 80% of them are completely irrelevant (50% were irrelevant when they were first written).

Some turn to other knowledge disciplines to look for sources of inspirations. The field of business strategy borrowed heavily from industrial economics and the filed of management sciences borrowed heavily on organizational psychology. What about "Strategic Foresights?” Where can we look for anchors and new inspirations? How about mathematics?

Fuzzy logic is the branch of mathematics that says that science isn't about absolute truth; it's just a heap of guesses at a reality that's much more complicated than that. The term “Fuzzy Logic” emerged in the development of the theory of fuzzy sets by Lotfi Zadeh (1965). A fuzzy subset A of a (crisp) set X is characterized by assigning to each element x of X the degree of membership of x in A (e.g., X is a group of people, A the fuzzy set of old people in X). Now if X is a set of propositions then its elements may be assigned their degree of truth, which may be “absolutely true,” “absolutely false” or some intermediate truth degree: a proposition may be more true than another proposition.

Professor Bart Kosko (Professor of Electrical Engineering in the University of Southern California's Viterbi School of Engineering and a Professor of Engineering and Law in USC's Gould School of Law) draws out some pretty interesting applications of that theory. He lost his faith and rediscovers it in science. The fuzzy future is part bog-standard libertarianism (with a side of Reaganomics), part extropian hooting-and-hollering, part small boy reveling in the Tolstoy and Clancy school of military exchange, and part Rube Goldberg engineering of unlikely theory, all bound up in hundred of pages of inscrutable equations in the footnotes.

My teaching on 'Design Thinking" goes beyond many simple (and shallow) creative tools. Forget those three wheels of design, technology or whatever. Those are complete BS. "Design thinking" is comfortable with change, it is disruptive and provocative by nature, and promotes new ways of looking at problems, often through new lenses. The strategic framing of complex and ambiguous issues requires thinking approaches that are free from organizational dogmas, codified limitations and old assumptions.

A large part of the design thinking process is to step out of roles conventions and free oneself from these dogmas and explore new frames of thought and approaches to problem solving. I am using "Design Thinking" to push us to rethink everything from scratch, including the tools of logic itself. Most people believe creativity means there is no logic. But what is creativity anyway? Or what is design? We need to look at the world or our business or social challenges with a fuzzy prism. It is like watching 3D movies without the 3D glasses. You can never make sense of the present and the future by using conventional lenses and logic.

In a world of full of chaos, unpredictability and fuzziness we need to look at the world through a fuzzy prism. Here is what Dr. Bart Kosco has to say, "How do you upload yourself onto a chip?" The fuzziest fact of all. The problem with current schemes in theory is a binary shock, when all of a sudden you die in meat, and wake up in chip. So how do you do it consciously? We could cut out that little chunk of your brain and replace it with an equally functioning chip, maybe a more powerful chip. We could keep doing it, while you're wide-awake. So in the end, you've completely transferred to a network of chips, and your brain is a bunch of sodium chunks in a jar of formaldehyde.

For the modern enterprise to evolve, survive and even prosper in the future, any change and transformation effort cannot just be putting on bandages. There is no one single future state to map against current state. There could be a range of different strategic futures and companies need to be ready for all of those. It takes a very different kind of transformation process when the future state is unknown.

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.

On Building The Creative Culture And Learning How To "Forget" Creatively.

We had our Idea Couture Christmas staff part last week. Looking back there were a lot being accomplished and a lot more to do. What started as a little experiment bringing multi-disciplinary design thinkers together and now becoming a key driving force and intellectual engine advancing the practice of design thinking in innovation and business applications. Idea Couture is where multidisciplinary thinkers come together with shared purpose and where creativity flourishes. I am looking forward to have our London and Mexico City offices running in 3-6 months. I feel I have the right people in place and that's a great start.

At Idea Couture, creativity means more than just novelty ideas. It means new ways to frame problem, using new lenses and developing new perspectives. I am so happy when I see happy people in the company doing great things. I am happy to see people growing and that's gives me tremendous satisfaction.

At the end of the day, we're in the business of producing the non-conforming super smart and creative thinkers and doers. I am pushing the envelope everyday and so far no one is complaining. Heartiest thanks to my management team who did a great job of putting togther the first Idea Couture Award.  You guys rock!

On the road this week and spending time with people hearing them talk about their innovation challenges and how they apply design thinking. Lots of great meetings. We're aware of the big changes coming ahead. Every business, government and instirutions will be impacted. Change does not creep up on us every 10 or 20 years, it is an ever-present business and organization phenomenon that is disrupting industries and causing firms and industries to disappear. Although the degree and velocity of change is unprecedented.

Everyday we’re dealing with more and more unknown and unknowable, but decisions still need to be made. Many of the challenges today are unique and have few or no precedents, so textbook solutions (and no guru don’t waste time buying whatever best sellers) or trying to find aHarvard Business School case study. Past solutions do not necessarily apply today. The external environment is constantly absorbing shocks from technological advancement, cultural change and systems failure.

Creativity is needed everywhere to rethink and reimagine products, experiences, companies, processes and even industries. Top executives are looking everywhere for new thinking and solutions that are outside the routine of orthodox strategies and old paradigms. So where can you look for new ideas? And how can you design an environment in which creative people can survive, thrive and flourish? We can begin by asking, how can you make people creatively forget what they know in order to reinvent the future? This is where sensemaking comes into play.

A big part of sensemaking is creative “forgetting” and it is first thing you must do. We all create our own environments and then constrained by them. Being able to aware and realize the impact of our own behavior in creating the environment in which we’re in is a very important first step. Forget who we are is something worth practicing. There may not be any scientific evidence to suggest that those who know what to forget can think more creatively about the future, but in the formulation of business strategy, creativity can be seriously constrained if it is burdened by the past. The problem lies in the notion of “core competencies,” which suggest that companies should stick to what they know best. If that’s the case, then why many of those once great companies should still be around.

Creativity And Innovation In Small And Medium Size Firms

I am in Egypt this week and trying to finish three big Power Point decks, writing 6 documents and finished reading 63 documents with a slow Internet connection. And trying to finalize the editorial content for March 2012 issue of my magazine. It is not easy.

The December issue of M/I/S/C/ is the big "Creativity" issue. It will be out in 25 countries in the second or third week of Dec. This is thickest issue so far  and will also available on iPad. I like the idea of "Creativity" as a magazine theme but also wanted to make sure they are relevant to business and not just pure creativity.

People often ask what is creativity? How does it happen? How do we prepare ourselves for it? Or can you be prepared for it? Do you have to be a whole-brain thinker, or do you only need the right side of your brain? Does it require for other profession that are usually not associated with creativity too? There is no simple answer.

Creative individuals have a few features that distinguish them from their peers. First, they possess both a rich body of domain-relevant knowledge and with well-developed skills to express them through different medium. And second, they find their work intrinsically motivating and enjoy the creative process not only interested in the outcome.

Creative people also tend to have a “discovery” orientation, which leads them to view situations from different perspectives, to find problems, and to ask novel questions and to avoid group-think. Almost every entrepreneur/start-up person is a creative person at heart, because it requires a lot of creativity to start and manage a new business (with the exception of franchise business). It is harder to find creativity in large firms not because there are not enough creative people, but the organization design and business processes make it almost impossible to be creative. And for them, creativity means finding ways to work around the system but not creating new ways to meet customer needs.

For that reason, many believe that small firms are more creative and innovative than larger firms. Not only they are more creative, they are more agile and nimble. But what about mid-size firm? There are companies that are too small to be big and too big to be small?

Medium size companies tend to lack resources and expertise whereas larger firms tend to have more resources and knowledge (including hiring consultants) but more vulnerable to external shock and any radical change. People think the sheer availability of resources means larger firms should be able to innovate along product, channel, process, and paradigm more effectively. That's not true at all. Any large established businesses carry their own old mental models and operational legacies make them hard to adjust to any changes - in particularly new ideas that cannibalize their core businesses.


I am not saying it is easier for small firms to innovate, it is not for the lack of creativity. Small medium companies tend to suffer a lack of knowledge cross-pollination and carry a higher degrees of path dependency. There are basically three strategies for innovation for small and medium size firms:

1. Advancing creativity and technological competitiveness based on new processes to deliver better products
2. Advancing technological and design creativity to design innovative new products
3. Advancing creativity and design thinking to turn products into experiences

Generally these three distinct models identify three trajectories for innovation that are largely separate from one another, although some complementarities exists. Medium size firms often suffer due to a lack of strategy or expertise to develop a robust strategy.  Their innovation in processes are often the results of the need to search for greater flexibility and minimize resource requirement. The high performance small and medium enterprises are usually the results of access to strategic advice combined their speed and agility in execution.

How Do You Create Industry Breakpoints And How To Benefit From Them?

I've just delivered an opening keynote in Mexico City for AMAP. The topic was STRATEGY IN THE AGE OF INN0VATION: How do we anticipate and leverage industry breakpoints? A very engaging audience and the weather was great. The keynote was based on the notion that companies should not only aware of when industry breakpoints are happening, they can also strategically create one to upset the industry status and create an environment for a new game.

Most people understand what the S-curve is in terms of technology but less so on what it means in terms of organizational design and strategic innovation. If you are not the no. 1 or no. 2 market leader, then you should consider deliberately creating an industry breakpoint to upset the market leaders. So how does one create an industry breakpoint and are there any pre-conditions? To make that happen, companies must be able to:

1. To learn about the breakpoint potential in the industry and have a sense about when it will happen (through strategic foresights)
2. To commit to making a quantum organizational change (through creating a case for transformation)
3. Having an economic engine (cash flow) to sustain the transformation (and do not take your eyes off from the core as you need it to sustain the transformation effort). 

I’ve seen people making the mistake of getting extreme pressure from investors when their core businesses are eroding and the future business are at embryonic stages. I see industry breakpoints within the beverage industry; consumer electronics industry, fashion and active wear industry and even the advertising agency business.

At the very basic, more executives see the challenges and fail to understand the implications and how to manage them. The bigger the organizations the bigger the challenges are. Most would resort to hiring a top tier management consultancy and after months of analysis the recommendations would either be

1. Invest in a particular product/segment/market that is growing and disinvest in markets that are too small
2. Acquire a growing competitor to add to revenue per share
3. Acquire a bigger competitor to gain better control of the market and increase market power.

None of these solutions are about innovation and worse; their key competitor would hire a management consultancy and came out with exactly the same recommendations. No wonder they are all locked into this zero-sum game. The reason people come to us is our ability to bring imagination and strategic foresights into the strategy process and creating new ideas not only to reinvent the core but also to re-imagine the future. So how do you recognize industry breakpoints? Here are the early signs:

1. Falling demand for standardized products
2. Declining margins in the industry due to low cost good value competition 
3. Rationalization of the availability of new sources of supplies or technologiesas amplified signals
4. New entrants pushing a new value curve supporting by different economics
5. New entrants/existing competitor promoting new behavior that can be disruptive And remember, it is far easier to try to create an industry breakpoints then reacting to one.

Many companies come to this too late and it is a lot harder to innovate when market share and earnings are under pressure. When earnings are under extreme pressure it will affect CEO’s credibility and even a good strategy can be misunderstood by analysts and critics.

What Every Innovation Manager Needs To Know About Value Creation? Let's Start With Something Simple.

What is value creation? Something commonly used in strategic discussions but not well understood among managers as well as business or design school students. If a company needs to reinvent itself, they need put value creation first. If a disrupter wants to attack an industry leader, it needs to put value creation first. If your company want to grow your way to greatness, put value creation first. If your company wants to stay relevant, put value creation first.

There are many practical issues that affect value: from the nature of owners and investors to the shifting perception and behavior of the financial market, smart and foolish ways to invest, divest, reorganize and acquire etc. At the very core, it is about how companies create value by investing capital to generate future cash flows at higher rates of return than their cost of capital. And how different ownership structures and organization designs could affect value. Here I am talking about one level below.

For business managers, technologists and design professionals this means creating value with everyday decision. Value is the source of competitive differentiation. Here are a few ideas for you to think about:

• Every innovation manager needs to know or consider constantly how each new ideas will benefit consumers and in what way whether helping them to perform, produce, organize certain things or feel certain way. Value can be both tangible and intangible. Customer value needs to be created first before you can think about capturing them. Value creationn before value capture.

• Every innovation manager must understand and better than their competitors at understanding where, how and why value is created and destroyed within your industry and your company. Not only by business unit, by product, by customer, by channel, by market, by technology, or whatever that best reveal your formula that drives value creation.

• Every innovation manager needs to know how their decisions will enable the organization to create, deliver and capture new value from change and foresight. By bringing new perspectives, they can help executives to make better future-informed decisions that create value.
• Every innovation managers need to stay focused on the objective of creating value through purposeful innovation. Don’t be distracted by other management measurements and indicators that don’t build organizations (they are for managing organizations, not building them) and avoid the trap of spend time managing the lagging indicator rather than creating real value for the future.
• Every innovation manager needs to remember that creating value is also about managing expectations. They need to accept that even great ideas will fall flat and some mediocre ideas will be successful and timing can be a key factor. Avoid "short-termism" and confusing product extension is innovation. The best way we can build successful innovation that delivers growth is by putting value creation first.

A misunderstanding of “value” is causing many companies to be “recklessly cautious” or "creatively overwhelm" and forgetting that they are competing for tomorrow’s market and cash flow – not yesterdays. And by their “short-termism” they are passing up terrific opportunities to create long-term value. “Short-termism” is not good for innovation.

'Purpose' Can Consciously And Authentically Infuse Workplace With Positive Emotive Energy Beyond Money Can Buy. There Is No Strategy Wihout 'Purpose'.

Teaching and practicing strategy is what I love. Strategy or strategic innovation is like a chess game except the chessboard keeps morphing into different shapes and there are always players entering and leaving the game. My experience is that it is subject that is undertaught in business schools and least understood in the business world. It seems like my students at CEDIM Master of Innovation Program are all having a good time. And I got a bottle of Tequila from Carolos and Michael. You need that to teach innovation I supposed.

First you cannot separate strategy from strategic innovation, competitive strategy can sustain you but cannot leapfrog others. Second strategy has a soft side, such as the putting ‘Purpose’ into the strategy equation. You cannot differentiate around something that you don’t have a heart for it.

Finding differentiation is hard enough, making sure it is relevant and sustainable is even more difficult. Putting ‘Purpose’ into it is the most difficult, you simply can’t fake it. When it comes to strategy implementation, purpose is even more important. Often you will have to make very difficult economic trade offs, without that, you will simply make those decisions based on short term economic benefits.

If Zappos did that, they would not have offered one year return policy or have their call center in India instead of Las Vegas. These all add up to the happiness indexes of Zappos which is the core of its strategy. Strategy implementation is also iterative, a process inducing various forms of individual and organizational learning, because both external threats and strategic responses are shaping these decisions on an everyday basis.

What every organization needs to achieve enduring success and power up true differentiation is ‘Purpose’. It is critical and can break the most robust strategy if there is a lack of one. It is not a mission statement or something that hangs on the wall. It is core reason for people to come to work and to mobilize all managers and employees to act consistently, responsibly and decisively. It triggers innovative thinking and trustful working relationships.

‘Purpose’ can consciously and authentically infuse workplace with positive emotive energy can impact every aspect of performance. It is the heart and soul of strategy.

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.