innovation playground Idris Mootee

7 Important Business Lessons You Can Learn From a Bank Robbery

During a bank robbery in China, the bank robbers dressed in fake Hugo Boss fashion, carrying AK47s shouted to everyone as they rushed into a bank: "Everyone don't move. This is a robbery. The money belongs to the People. Your life belongs to you. Your designer handbag we will not take. We don’t take your IDs and we are not identity thefts, that’s not ethical at all. We will take only the money from the bank."

This is called “Staying Focus!”

The older robbers shouted “Don’t do any tricks. I know them because I used to work in a bank too. Just do as you are told.” One guys asked. “Which bank did you work for?”. He replied “The Sperm Bank. But we never had a robbery while I worked there.”

This is called “Domain Knowledge!”

Everyone in the bank got down on the floor. One woman was looking at her smartphone and noticed one of the robbers showed up on her Tinder app and shouted hey you look good and is that a real picture! The younger robber said, “We are only here to do work, not looking for a date. Perhaps after. Now I am busy?" The big brother yelled at him ”You should have turned that off!” And then everyone in the bank started looking at their smartphones.

This is called "Avoiding Distraction!”

Then one of the bank’s staff started asking the robbers. “What are you going to do with that much money? You guys should know investment is risky if you don’t know anything about it. You don’t want to risks your hard earned cash. We have different investment vehicles and the money can be placed in Switzerland and safe even if you got caught.”

This is called “Risks Management!”

When the bank robbers returned home, the younger robber told the older robber: "Big brother, let's count how much money we got" The older robber said: "Don’t bother, the news will tell us. Too much work and let them do the job. I'd rather spend the time look at stocks we want to buy with the money. The market is a good buy now.” The young robber said “Ah yes! Let them do the job!”

This is called “Opportunity Cost!”

Right after the robbers were gone, the bank manager held a meeting. But the supervisor said to him: "Shall we add the $10m that we have lend to our friends and families so we can write them off! Perfect timing.”

This is called “Opportunity Mapping!”

The next day, the TV news reported that $100 million was taken from the bank. The robbers counted and counted and counted, but they could only count $10 million. The robbers were upset: "We risked our lives and only took $10 million. The bank manager took $90 million without doing anything. That’s not fair. I guess that’s what happened when people understand business”

This was adapted from a joke I was told when traveling in China and dramatized.

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

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

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

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

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

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

BALANCE

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

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

STRUCTURED

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

Recommended: Louis Martini, Sonoma County Cabernet Sauvignon.

FRUIT FORWARD

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

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

BRIGHT

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

Recommended: Frei Brothers Reserve, Russian River Valley Chardonnay

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

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

Five Deadly Mistakes of Organization Transformation That Leaders Must Avoid.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

What Is Happening To Sony? Can Sony Be Saved?

2013 was a good year and a very busy one for me. Having been on the road for over 120 days; delivered some great projects and worked with some of the smartest and most creative people around the world was all fun and also exhausted. Now is the time to think about what the future holds?

I really don’t know what to write these days, I want to write about a lot of things from economics to politics and from luxury brands to consumer electronics and from rethinking management to education, so much to do and so little time. I hardly find time to write for my own magazine these days.

2014 will be a year of big change or beginning of one for many.. We’re seeing most dominant designs of our everyday technologies reaching the end of the S-curve and it will hard to see any breakthrough unless we change the way to look at the industries. Some big innovation is needed to create demand. Not speakers and headphones and other accessories although it helps retailers a bit.

Innovation is hard to come these days and most innovations today are mostly incremental in nature. In the world of consumer technologies, from smartphones to tablets and PCs or digital cameras to TVs, everyone one of them is facing serious challenges whether you’re the market leaders (defenders) or followers (attackers). It is hard to drive new behavior and predict on their adoption rate and the low end is flooed with commodty players. On the other side of the coins, opportunities are plentiful. Microsoft, Sony, HP are all in the process of rethinking their business strategies.

Sony was once the most loved and most innovative company. The company is both strategically vertically and horizontally integrated; once designed and produced the best TVs, video cameras, music players, home audio systems and game console, today they are struggling on all fronts. Sony was my no. 1 brand for a long time. For many, Sony is already dead or what turned into I call a zombie brand. It might seems like an overly pessimistic view given the size of the company and they still have a lot of good products, strong brand (in some markets) and a lot of technological innovation, but then what went wrong?

Sony used to be the synonymous with Japan and innovative products. They even considered buying Apple at one point and decided it not worth acquiring (Can't imagine if they've done that and there would be no Apple today). In 2012, Sony’s net loss of almost US$6 billion mainly came from heavy losses in its TV business. Of all eight divisions, only music and financial services units managed to boost a little profit from a year ago.

When I visited Sony stores the last time a few weeks ago, they were so 1990s even though some of the products are pretty impressive. In fact, I was very impressed with the latest camera line-up and I use a RX100 along my Leica M. I am not sure if good products are enough these days.

Sony have made a lot of mistake including alienated smaller retailers, limit itself to internal innovation capability insteadn of using outside consultants to come up with new ideas and heavily rely on local markets (30% of their sales) and as a result ignore what’s going on out there. Sony CEO Kaz Hirai has proclamed that Sony must chart a new course, his quote: "I believe Sony can change." So far it is not happening.

This Japan's technological prowess, wowed the world with the Walkman and Trinitron TV and PS2 and PSP is now struggling to stay relevant. Is it just Sony or "Japan Inc." that is in trouble?  They missed the while digital music wave, missed the smarphone wave, missed the tablet wave, missed the social face and now probably will miss the next whatever wave. Even Google missed the social wave and left the door opened for Facebook and Twitter, but they do have a few wins such as Android.

And for Sony, my advise for you is to stop behaving like a Japanese company. Adopt new practices and move fast. Speed kills. The world has changed and you need to wake-up. Play catching up is not enough and you’ve been doing a good job producing a decent tablet, a nice phone and a set-top box, a not so smart smart watch and whatever, does it matter?

You don’t have a strategy. You want to win in every product category and that's impossible. You should get rid of at least 50% of your product lines. And at least make 10% of your product spectacular ones - iconic. Rethink if you want to play in the smartphone game, may be you should exit it for now.  Your strategy of “One Sony,” will not work, it is an ideal strategy only on power point or paper. Apple works with “One Apple,” but if you consider the context of Sony's situation, it may not be the best move for now. Sony needs to think different and should not make the mistake of try to replicate Samsung or Apple, those two companies are unique in their own ways. The two will own the market (already did) and eat you dinner, since they already took your breakfast and lunch. 2014 is a critical year for Sony.

What Do We Need More? Managers Or Strategists? Or Design Thinkers?

In business school we are taught the difference between a good decision and a bad one, and how to leverage a good one to get the most out of it. We are also taught that the best decisions are those that minimize risk and produce the highest return. On the ground, management decision-making is never that simple.

We want managers to have a vision for the long term but be flexible enough to respond to competition in the short term. We want them to produce consistent results and yet experiment with innovative ideas for growth. We want both change and stability. If change is the only constant, its constant companion is the avoidance of change.

Because the future is full of unknowns, it’s far more comfortable for managers to pursue stability by optimizing existing core business operations than to prepare for change. There is no theory to teach managers how to achieve a balance between the known and the unknown; the ability to do that comes from experience. But if your experience is defined by an unwillingness to step outside the envelope of stability, you will never know if or how the unknown may help you make a better decision. You will never think beyond the immediate tactic. You may become the world’s best manager of the known, but the least able to think strategically about the future. And the future is where the money is supposed to be. Just ask your shareholders. This unwillingness to strategically embrace the unknown is often why companies fail. When they do, we naturally apply 20/20 hindsight to expose all their wrong moves or analyze how management didn’t act fast enough or how it refused to act at all.

Sometimes management acts too slow to transform the organization when the value is shifting to other activities. Sometimes it bets on new things and fails to protect the core. Sometimes it just can’t keep up with rate of change caused by technological disruption. Is the lack of management development progress for the last 30 years a contributing factor? We produce tons of MBAs every year (it’s estimated to be over 150,000 in the US and 375,000 globally). Should we not expect companies to be smarter as a result?

In the current business climate, management tends to prioritize risk-avoidance and career protection over bold strategic action. Managers operate in fear and tend not to bring their imagination and empathy to work. They succeed by avoiding blame when things go wrong and taking credit when things go right. We forget that the best managers take calculated risks and develop strategies to encourage others to do the same.

For the strategist, the only true way to maintain a useful level of predictability is to actively engage in the shaping of the organization’s future. Through conceptualization and development of forward-looking scenarios, an organization can equip and prepare itself for the inevitable future. Our emphasis on education and management development has been on training managers more than training strategists. Today, we need strategies more than ever and we need to convert our top managers to strategists. We need to encourage and empower mid-to-senior managers to take bolder risks and become the innovative force that out-strategizes the competition.

The practice of management needs to move away from purely avoiding risks to a deeper understanding of risks and how to master them to develop business opportunities and create value. Ultimately we need to train people that are equally versatile as managers and strategists. That's why Design Thinking can play a big role. Whether you're a good manager or strategist, you also need to be a good design thinker.

This article is an except from the coming issue of MISC magazine the Balance issue which will be available in bookstores Dec 2013.

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.

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

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

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

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

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

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

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

Tim Cook Has A Far More Difficult Job Than Steve Jobs. He Has Been Making All The Right Moves So Far.

Congrats to Tim Cook who is over one year into his tenure as CEO of Apple. Big shoes to be filled and now Apple is moving into a new competitive arena because it is now the industry leader (defender) - the primary target for attackers. Tim has two jobs: 1/develop a competitive business strategy to defend its market share from the low end and block entrants  2/an innovation strategy to find an industry/category to disrupt leveraging Apple’s core capabilities. There were a few bumps like the Siri or Googlemap etc., but those were unavoidable.

Sabotta, a former director of Apple's federal sales group, criticitzes Apple’s CEO Tim Cook in his Kindle book that he is afraid of being wrong, lacks leadership skills, and is a "lightweight" when it comes to understanding technology. According to Sobotta, “Tim will react to the numbers or his fear of being wrong quickly. Fear of being wrong is a managerial trait that runs strong and deep in Apple because of the way Steve ran the company. Even the appearance of being wrong when in the end you might be right is dreaded at Apple. Technology-wise, I think Tim Cook is a lightweight. I never felt passion for technology from Tim like I did from Steve and some of the great engineers.”

I must say I won’t judge Cook’s performance or management style based on these criticisms (Sobotta acknowledges early in his Kindle book about his experience at Apple and that he was asked to leave Apple in 2004.) Being a CEO or Apple’s CEO is not exactly an easy job.

The way I take his comment is actually positive. A technology “lightweight” is more effective and desirable in the case of Apple to avoid the most common mistake in this industry when the technology voice overpowers business and customers. Technology heavyweight is actually less desirable for the CEO job, it is not Apple business strategy for technology big bet.

In his blog, Sobotta is critical of Apple and its Jobs' style of management in many ways. Some titles of his posts include"Do Apple Employees Need A Witness Protection Program?" "Has Apple lost its soul?"  He is basically saying Apple used some of the worst management practices to build the world’s most valuable company.

Apple is what Apple is today because of Steve Jobs’ strategic and aesthetic arrogance, charisma and capacity for work. If there’s one thing worse than a leader who micromanages to the point of stunting the creativity of his team, it’s a leader who knows and feels that there is a better way to work but fails to act on his gut. That wasn’t Jobs. As the master of anti-subopimization, understanding how he and Apple achieved such greatness isn’t about compartmentalizing each facet of Steve Jobs – it’s about recognizing how his various CEO personas were symbiotically entwined so that, when they intersected at crucial points, magic happened.

Maybe Steve Jobs was a perfectionist, not a control freak. Being in control is different from being a control freak. Those accused of being the former are often the victims of those who just don’t have the skin to stay in – and change – the game. Either way, new and extreme times call for new and extreme measures. Sometimes control is exactly what an organization needs. We see grand strategies that look good on paper and in the boardroom, but without an emotionally committed leader with vision, belief and conviction, the successful execution of idea into results won’t happen.

Armchair management critics will continuous to critique Jobs’ management style as ‘control’, even while every CEO from luxury goods to fast-fashion retail seeks to replicate his success. Ultimately, his example begs one simple question: Why aren’t more of us control freaks? Rather than decrying control, maybe it’s time to take the reins of our own ideas, innovations and organizations by studying the attitude, approach and micro-details that were responsible for transforming what those same critics once called a niche computer company into the $700 a share behemoth that everyone – including all those former PC fans – loves today.

As for Cooke, he has a far more difficult job that Jobs, Apple was an attacker and have nothing to lose to change the game. Now Apple is the defender and Cooke has to play both attacker and defender. It is a high risk game and he has every reason to react to the numbers or have ear of being wrong. That’s his job.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Innovating Within Or Outside the Core? Let's Start With What Is The Core?

One interesting dilemma about strategy and innovation is how far we move away from our core and more importantly how do you define the core? What are the core competencies of Gap? Netflix? LVMH? BMW? Hermes? Canon? Nike? Marc Jacob? Blackberry? Samsung? HP? Target? Starbucks? Do they even have anything in common?

Do you see core capabilities as distinct capabilities or deeply embedded values? Or special access to buyers or assets? There are hard core competencies and soft core competencies and people need to understand the difference and that they are not mutual exclusive. Core competencies are double-edged sword. How do you define ‘core competence?’ It is currently seen as a unique capability/know-how that provides some type of competitive advantage for an organization and it is not easy for other to replicate. It is not one thing; it corresponds to organization design, and involves underlying skills, systems, technologies and knowledge in specific industries or markets.

A simple test to see if something is a core competence, ask yourself, "Does this 'thing' give the company a unique advantage over its competitors and create value through a differentiated offer or extreme cost advantage or both?"

When my staff comes to me for career advice, I always ask them about their core. Who are you and what are you really good at? I advise them to find out what they like to do and what they’re good at, and if you combine skill, passion and strength, you are going to excel. You need to understand and align all those three. Likewise, companies gravitate towards their core competencies, capability and values.

Successful organizations adopt a rigorous approach to identifying and defining their core competencies and then single-mindedly pursue them. When market shifts and suddenly their core competencies and strategic assets all become strategic liabilities. It happens fast these days. The most important thing is to put innovation at the core and use design thinking to drive continuous renewal and reinvention. There is only one game – new game.

Auto makers have for years restricting themselves to a few tasks they do best -- designing and assembling automobiles -- offloading all other value chain activities to others. A web of suppliers produces the components that go into the car and a web of dealers sell, deliver and service the cars bought by consumers. By limiting their focus, auto makers are able to perform the tasks they undertake extremely efficient using Six Sigma. Apple is doing just the opposite.

Luxury goods companies for years restricting themselves to a few tasks they do best – designing collections, fashion shows production and retail management – offloading other value chain activities to others. The question is what seems to be a very creative (won’t use the word innovative) industries are mostly very old fashion companies that have done very little to transform the category, the industry and the economics. There are a very few notable exceptions. The reality is innovation and design thinking rarely happens in the fashion and luxury goods world. They need to break out of their current creative mode and start innovating. The new affluent luxury goods consumers are less interested in traditional status symbols and more interested in ‘content-rich socially-validated self-identity creation experiences.’” It is more than the logo, price and exclusivity. Many will wake up to this shift and realize this is not the customers they used to know for many years.

Today, organizations must confront the dilemmas of how to manage their core competencies and capabilities. These are systems, assets and skills that need to be continuously monitor, evaluate and ensuring they are up-to-date aligning to the company’s innovation agenda. This has been becoming increasing complex especially with so many uncertainties. When you start thinking about putting ‘design thinking’ as your core competencies, suddenly the idea of core competencies give new meanings.

We are going beyond the narrow definition of core competencies and you can think of ‘design thinking’ as your cultural capital: an organizational wide appreciation and practice of design thinking skills that can be leverage across solving channel problems; produce development, marketing and operation challenges. It is time to rethink the core definition of ‘core competencies.’