innovation playground Idris Mootee

Most Companies’ Crisis Are Worse When Compounded by Industry Disruptive Forces with a Leadership Crisis

Companies that are facing industry disruptions are bad enough; during these times leadership faces the most important test – the ability to lead during a crisis. The need of foresight, change and organization design are what true leadership looks like. Some sees this an opportunity to gain power and fulfill their thirst for greed and this needs to be stopped. Because strategic leadership matters… whether through malice or naïveté, those who abuse or tolerate the abuse of leadership place companies at risk.

Poor leadership cripples businesses abilities to accept new realities, correct mistakes and make strategic bets. At lower levels in the hierarchy, the problem was even more severe because in decisions and lack of strategy. Seeing things for what they are. Strong crisis leaders live on the front end of reality and speak in future tense. They recognize systemic drivers and their significance and do not shy away from the consequences of what they see. Foresight and strategic intellectual integrity is a key component of crisis leadership; they think of what is best for the organization, not their own personal or political gain. Poor strategic leadership is often the results of the following:

THE FALLACY OF FORESIGHT

Poor leadership assumes that the climate will gradually improve and things will not get worse. They think the future is predictable and they have a good pulse of the market better than others. Often what they have is groupthink. The reality is things do get worse and they are still reacting to the shift rather than getting ahead of the shift. They could not connect all the variables that are shaping the future of the business and fail to calculate the unforeseen market, industry, technological, social, and behavioral shifts. The fallacy of prediction inevitably led to the downfall of many businesses.

Strategic foresight is often lacking to allow the companies think ahead of the curve. Strategy and detail with speed and clarity. They are able to see the big picture. They can see all of the moving parts and understand what is cause and what is effect. They get below the 30,000ft level and can dig deep into detail without being mired in it. They quickly develop a very detailed knowledge of the issues. This ability further enhances their capacity to view the problem realistically.

THE FALLACY OF SECRECY

Poor leadership believes it is better to shield middle and junior employees from the seriousness of the crisis and radiate a false sense of comfort hoping people won’t read what’s out there. The most common defensive speech usually include 1/ We still a very loyal customer base and they are very loyal to us 2/ We still have a lot of cash 3/ Our product is good and we need better marketing 4/ We are not aggressive enough in pricing. All wrong. Many of these can go away very quickly. Companies should connect their passion points to a foresight-based business strategy that are executable to secure their support and commitment.

THE FALLACY OF ORGANIZATION

Poor leadership usually based them on the notion that a new organization structure is important to formally show the transformation. Any formal organization redesign takes too much time to execute and slow down the transformation. This is the time where they should get rid of people’s title and organize as hubs and networks to executive their strategies. It needs to act as an attacker not a defender. Defender usually won’t survive.  Leaders must be strong enough to hold themselves (and the board) accountable for the past transgressions of turning a blind eye from right and poor decisions or indecisions that led to the current state. Current problems are most likely the results of decisions that were made 24-36 months ago. Strong leaders take ownership of the problem and acknowledge that no magic can undo these poor decisions.

They understand, however, that a long-term solution requires the input and involvement of many stakeholders. They identify those individuals and work together towards a solution that everyone can support and can live with. They also need to differentiate from those who take advantage of the crisis by advancing their own agendas even at the expense of the organization. The successful crisis leader seeks out individuals who have a different and strategic perspective on an issue even whose advice may be contrary to that of their board.

Crisis is the time for real strategic leadership. It is the time to deliver bad news when they need to and do it in a way that avoids panic and provides a realistic level of hope for the future. Above all, they are courageous enough to make sharp decisions, act with speed and take carefully calculated risks.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

In Algorithms We Trust. Do We?

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

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

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

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

Virtual Reality Is The Next Big Thing. Beyong Shocking And Disruptive. It Will Create Tens Of Billions Of Value. Who Will Win This Game?

The world is becoming crazier and more exciting as Virtual Realities are becoming more real and the lines between our physical world and virtual word are fast becoming blurred. Next year 2016 will be an important year as companies are finally making virtual reality real with only 2 main players participating on the race: HTC/Valve, Facebook/Oculus will be making VR products available. Microsoft is partnering with both Valve VR and Oculus while Sony is pushing hard not to miss the bandwagon with Morpheus.

The user behavior of VR has yet to come to shape and will be evolving for the next 5 years, the idea of information conveyance is interesting and playing a special role in the realm of virtual and augmented reality. We are learning to design cues in the VR world to tell users where to move or go or to touch. This is still a challenge as don’t think about it that much in the physical world. We walk into a room assuming the chairs are moveable and the cabinets are not. That sense of reality has changed in the VR world. Anything can happen to everything. It is like living in a dream.Those who have experienced the HTC/Valve Vive were completely fascinated by the experience. HTC Vive is clearly ahead of the game.

For VR, unlike 2D gaming or in the real world, we have arrows and signage to tell people where they can go. In the VR world when user is wearing a head-mounted display, the users are actually operating in two realities – the real, knowing that the user is wearing these gears and the virtual, which is so immersive (more so for the HTC/Vive roomscale technology that allows you to walk around the room) and therefore difficult to find a frame of reference.

The question is do we want user to have the feeling of wearing a space suit or simply feeling they are acting as normal with no gears on them? The awareness of wearing a suit will remind people they are in a VR world unless the suit is a normal suit. While body motion sensing is great when body movements are being interpreted by motion sensors as perceived input and turns it into commands and controls. Basically, with this technology, you are the controller.

KOR-FX is making an interesting gaming VR vest that uses acoustic feedback that, in turn, is processed into haptic feedback. Its software analyzes the feedback felt by the user, depending on what’s going on with the on-screen and what the user is doing it with. The controller “acousto-haptics” is to define acoustic feedback that is being felt.

Sixense is another company currently developing a wireless solution to hand input in virtual reality with the STEM System making use of alternating current (A/C) electromagnetic field to accurately track body movements in terms of position and orientation within a radius of a stationary base.

In designing VR experience, the haptic side of things is perhaps the most difficult to address. Oculus has yet to demonstrate an “official” control mechanism for the Rift, instead letting each developer use the peripherals they find most suitable. I am speculating they may end up figure out a visual hand-tracking technology from a front mounted camera. So what is the best way to navigate in the VR world? Input is still a key challenge for VR as a pure look-based movement (turning your heads) supported with some analog input (mouse in your hand as an example) but sometimes the head is looking at a different direction and the hands are not in sync. This can causes problems as if the system is receiving two very different commands.

Expanding information conveyance is still early in the usability learning curve and we are a few years away before arriving at a dominant model. There are still many creative options we can explore and they are not mutually exclusive either. A voice based system guiding the user as an example. Once we start adding social interaction in shared virtual environments, it will explode. Social VR means social presence and this is a $20 billion dollar business at a minimal.

The inevitable evolution of inputs in some form of controllers will keep coming. Xbox and Playstation will need to think how to migrate their current controllers to take advantage of the new requirements (not easy) and we can expect to see more innovation from start-ups including companies such as Razer Hydra from Sixense, or camera-based systems which are limited by the camera’s line of sight. HTC/Valve is also working on some cool solutions aiming to provide the best and not just the first.

Immersive VR systems that alter your sense of physical reality can give user the illusion that you are located inside an unreal virtual environment – or a telepresence - the ‘sense of being there’ or ‘feeling of being there’. In the early 1990s this idea was transplanted to virtual reality, where instead of being at the remote physical environment, the participant was in a virtual environment with a sense of being at the place depicted by the virtual displays.

A Swiss healthcare hybrid MindMaze announced its pioneering move into the VR and gaming spaces with MindLeap. Combining headset-mounted neural sensors and motion-capture cameras, the system is designed to “facilitate neuro-powered immersive virtual and augmented reality” on consoles platforms as XBOX, PlayStation and Android. This is still in development and I am not sure if it can be done soon. They leverage technology developed by the company for a range of medical applications in treating neurological deficits, such as helping amputees control robotic limbs. Neurologial control is still a bit of science fiction and will be a long way before it can be mass commercialized. I like to dial my HTC M9 with my brain some day.

For now, we will be sticking with head-mounted and handheld controllers. They are enough for us to re-create boundaries and rethink presence. Every time you pick up a HTC Vive,  you are about to enter a virtual boundary that didn't exist before. Exciting and also scary!

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The “Internet of Useless Things” or IuT Is Everywhere. Not Every Player Has A Plan.

The CES is a good one this year. Everywhere is IoT. And honestly I am little tired of hearing IoT or “Internet of Things” which is estimated to become a $7 trillion industry where thermometers, clocks, garbage cans, toilets, washing machines, watches, smartphones, fridges, baby monitors, garage doors and coffee makers are all connected digitally, allowing seamless interactions and smart living for us. Sensors are cheap and can be deployed everywhere collecting data, unnoticed. Data on how you move around in your home or office, in the gymn, on bike around your community, in a car, in public transit etc. How much water and electricity you use, and when; how much garbage you produce and dispose. And these reams and reams of information will make everyone of us overloaded with big data.

The biggest opportunity is Data Spam Management (just invented an industry). These data streams will drive us crazy eventually if we don’t know how to use them. Might as well turn all of them off. For those who are afraid of cookies that track them on line, it is going to get worse and much worse. When it comes to monitoring individuals and collecting details about their lives, privacy is over. Many people are still uncomfortable and remain to having their data tracked and analyzed. It is hard to define what privacy means in the world of big data. Imagine how much one can find out about you by going through you trash, in this case, your digital trash from sensors and devices that surround you 24 hours.

The world of hyper-connectivity is creating man opportunities for us and also is close achieving the top of a hype cycle. Perhaps itself is a recycled product of formerly known as the Smart Home or Smart Appliances. 90% of new products are merely solutions looking for problems and there are no unmet needs. Nest is a lucky case and there are not that many lucky cases for people to hit the Jackpot. When people enter this industry, they first need to understand the emerging behavior as a result of big data and what does it mean to have them.  And how it can shape our behavior? And what is the behavioral economics at work? What industry will it power up and who will benefit from it? Who owns the data gateway? I can go on and on for a day.

I am not an early adopter but I buy all these tech junks for my friends to try. I am really not interested in the thermostat. I am not interested in an Internet enabled door lock and for this one, I am sure I will be the last adopter. To create devices that can connect is easy and anyone can enable any objects with some kind of connectivity be it Bluetooth or Wi-Fi. But it takes some strategy to make sure you have a real customer value proposition.

The business opportunities for IoT are undeniable, but most of the visions out there were either overly simplistic or flawed and ultimately unworkable. The number of connected devices is expected to grow 18% each year for the next seven years and people couldn’t wait to have their “things” get connected. Beyond the hype, most will question the value and will understand the total costs of ownership. Buying an old fashion clock, toilet or door lock is easy. We can be sure that they will not break (most of the time) and needs very little maintenance. But when these become electronics, it will be a very different game. There is a cost to maintain (making sure they remain connected and receive update etc.) and needs to be replaced in a shorter period as technology moves fast. Way faster than they redesign your toilet or old fashion thermostat. The true value comes from larger companies designing integrated architecture so the orchestration of these appliances large and small can create a new level of convenience and delight. The oppotunties are not for everyone. The rest are just playing in the IuT game.

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

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

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

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

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

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

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

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

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

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

• Anticipate and Leverage Moments. Most breakthroughs don’t happen through excessive rationalization or planning. In fact, almost all breakthroughs are sparked by “moments.” This is one of the things I teach people about looking for breakthroughs. The process of finding any breakthrough – whether in business, technology or design – often involves immersing oneself in large amounts of data and extensive debate and the synthesis of complex information. Most people fail to see the moments when they happen or fail to capture them. I started working to facilitate these moments a long time ago, making them happen more easily and more often. How I ask questions and how I push people to their limits (as I do with my staff) is one way that I try to help them to experience moments. I feel bad for sometimes being seen as critical and demanding, but that’s how I get myself and others to create those moments.
• Expand Awareness through Emotions. There are so many myths about emotions. We often associate them with extreme cases where we overreact, when they prevent us from making the right decision or make us irrational pursuing things that we want. This is all true, but emotions also have a positive side if you know recognize and respond to them. Emotions are our inner sensors at work, sending us weak signals from the outside. They trigger how we expand the operating parameters of our cognition, help us take in more detailed information, hold multiple ideas in our minds at once, and ascribe meaning to the things, people and events in our lives.
• Imagineering as Daily Ritual. Unless you’re in the business of producing film, animation, video games or other highly creative outputs you most likely don’t have a need to use imagination in your daily work. But imagination is not a tool we can call up on demand; we need to practice using it every day in order to maintain our ability to imagine. Imagination is a major part of how we frame and solve problems. Much like yoga, tai chi or voice training, imagining requires that we put in practice time in order to expand our ability. Applied imagination (or imagineering) can increase the number of creative options available for specific problems that we’re trying to solve and help with tasks like ideation. Rather than focusing on developing ideas or how to solve a problem, Imagineering is about rapidly and randomly envisioning what might be, what could be, and what couldn’t be. It's very easy to compare creativity and knowledge in an abstract, metaphorical sense – but we know that our imagination is developed from the knowledge we gain in the experiences of our daily lives and works by employing that information subconsciously until it’s ready to break through into awareness.
• Practice Design of Meanings. Try to design a breakthrough project or pilot activity for yourself as an experiment. Some breakthroughs are sparked by eureka moments based on insights – but far more are based on design. Design-driven innovation is spurred by thinking about possible breakthrough features, meanings and product languages that could emerge in the future. This cannot be done by talking to consumers or looking at current user behaviors. Consumers can’t really imagine radical futures, as they are anchored and invested in the current one; thus they are not helpful in anticipating possible radical changes in new product meanings. Big breakthroughs don’t necessarily come from disruptive applications or advanced functions; sometimes it’s new meanings that shift the universe. Think about how every one of the everyday objects that we see around our home can be transformed: instead of being simply functional, consider how to turn them into symbolic objects of irony, desire and affection.

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

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

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

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

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

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

 

The Biggest Idea These Days Other Than "Wearables" Is "Destructables". We All Need It.

I think the biggest idea today other than “wearables” is “self-destructables” and it is exactly what we need these days. OK this is the first time you hear this. "Destructables: is the biggest unmet need because privacy just might be the biggest enemy of big data and googleglass. This trend is gaining momentum - think “ephemeral media” which is a way to make any digital assets including photos, texts, emails, posts that can self-destruct once they’re delivered, read or triggered by an event. I would pay for that service.

With the big government always watching and with teenagers having a little too much fun doing silly things, there is something about what we used to see in Charlie’s Angels when the boss messages the Angels about their mission;  they were briefed on a radio that would destroy itself after being played. I think this should be a key feature for everything these days. Yes, there's SnapChat.  But we need more than that.

Encryption Company Silent Circle has a Silent Text app available for Android, which includes a “Burn Notice” feature that self-destructs the message from the sender and recipient’s phone. Startup Burn Note launched its vanishing text and mail service. It allows you to set a timer for how long you want your information to live on the internet before it explodes—virtually, that is.  And even Boeing, yes the airplane manufacturer, has launched a Smartphone that will erase all data and deactivate if tampered with or pried open.

Not sure why Boeing is getting into the cell phone business, BlackBerry should have thought of that feature long time ago.The Boeing’s device which runs on Android and will be sold primarily to government agencies and companies engaged in defense, intelligence and homeland security. The heads of the screws will be covered with tamper proof guards to identify attempted disassembly, breaking open the casing of the device would trigger complete deletion of the data and the device will render itself inoperable. But it will not generate smoke and physically self-destruct - I'm a little disappointed. They should put a bit of drama there as part of the customer experience.

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.

The Bionic Man/Woman Is Now Possible! It Gives New Meanings To Wearables!

Remember that Six Million Dollar Man TV Series? When ace test-pilot Steve Austin's crashed, he ended up in a poor shape that his only chance of survival was to replace human spare parts with technologies. That was the beginning of “wearables” I supposed. The government decided to invest millions to use the latest technology to rebuild him with cybernetic parts which gave him superhuman speed, response and strength and the superagent.

Thirty-five years later, DARPA's Reliable Neural-Interface Technology (RE-NET) is working on it and  trying to improve the speed and accuracy of neural interfaces. Such interfaces can happen in the brain, as in the case of Hemmes, or someplace else farther down the line, closer to the missing limb. It is a highly complicated task to try to translate these commands to muscles that drives the myoelectric arm. Most important is that any of these won’t need a brain surgery or implant. The challenges include weather change and other external factors can affect the myoelectric arm and there is the issue of electrodes slipping on the skin.

The idea of implanted electrodes is very attractive with the goal to provide near-natural hand movement. Another sign og progress is FDA just approved the world’s first approved bionic eye. The Argus II, which treats patients with the rare genetic condition known as retinitis pigmentosa was approved by the FDA after twenty years of research and $200mm of investments. The Argus II Retinal Prosthesis System, which was approved to treat people with severe to profound retinitis pigmentosa, doesn't actually restore vision or allowing them to see, just enough to detect light and dark and the contrast can identify the movement or location of objects. Almost like the first generation of cell phones. We are a few years away before they have advance features. When the photoreceptor cells in the eye's retina are damaged, people can tell the difference between light and dark.

To restore light and dark vision, a tiny chip containing many electrodes is implanted on the patient's retina. The patient wears a pair of glasses with a video cam attached to it. The camera sends the recorded image wirelessly to the electrodes in the chip, which then turns the information into a signal that the brain can understand. It will be a low-resolution 60-pixel image only and enough to give people a sense of what’s in front of them.

The breakthrough in nanochip will open up tons of opportunities to improve our senses or replace in medical cases or enhance in other cases. In less than ten years, those who can afford to spend $25,000 can get a bionic eye to capture wider light spectrum or advanced your visual search functions through Google. I won’t be an early adopter for sure.

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

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

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

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

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

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

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

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