Venture Capital Lacking Exit Opportunities

The VC bloggers have been discussing alternate funding models for a while, but this story from the New York Times on Sevin Rosen Funds giving back $250 million to $300 million to investors is more than just punditry, it’s walking the talk…

“If we really believe that there are fundamental structural problems in the venture industry, should we raise our fund and just hope that the problems will get better?” the firm wrote. The answer was no.

Published
Categorized as Economics

BarCampNYC2

Entrepreneurial Improv Theater

BarCampNYC2 happened last weekend and was a great time. Holding it in the Microsoft offices was a little spooky, but at least that turned up some booty.

More than anything I was surprised at how little code talk there was compared to start up and design talk. Sessions like Entrepreneurial Improv Theater were a great chance for everyone to practice their VC pitching skills. Though it was obvious how hard it is for any one person, myself included, to make their brain stretch from code to UI design to product design to organization building to marketing to finance etc. I was impressed to see everyone try that stretch then collaborate to combine their skills.

Planning a Writing Day

My friend Harry received this useful piece of advice from his writing coach. She suggested you follow this schedule during a day of writing:

  1. Spend 10 minutes planning your work
  2. Write and write until you are out of ideas and energy
  3. Reward yourself with fun work like research

Is Design the New Management Consultancy? Not Exactly.

Some folks are asking this question. I’ve spent the past two years making the transition from designer to business consultant, jumping a lot of hurdles along the way. Here’s a little of what I learned:

  • Highlight opportunities instead of bitching. As designers, we walk around in the world and feel overly sensitive to everything that isn’t designed well. We watch customers struggle when using poorly designed products. There’s an inclination to highlight these faults to executives whom we think should know about these faults. And maybe they should, but mostly they need help seeing the big opportunities. It might sound like product faults and market opportunities are simply the flip side of the same coin, but it’s the difference between being perceived as a whiny designer and a valued business advisor.
  • Know your limits. When I hear a designer say, “We were doing the same kind of work McKinsey would do” I think “You really have no fucking idea what McKinsey does.” I used to work at BCG (in the IT dept) and I have yet to meet a designer with thinking, methods, and tools nearly as sophisticated as those consultants. Just consider the career path at these firms: they take the top students from the top business schools who in turn have taken the top undergrads, and so on. Then the consultants work in a demanding up-or-out environment where excellence is necessary. This culture breeds great execution much more effectively than the best design studio cultures.

    And I’ve beat the design thinking drum as much as anyone, but it’s naive to believe only designers think this way.

  • Invest in new hammers. Not every business problem is best solved by a product/service design or redesign. Sometimes an acquisition is the answer, or a divestiture, or hedging the financial markets. Business leaders have a lot of tools in their toolbox: marketing, sales, operations, finance, IT, HR, strategy, customer service, etc., and each of these in turn has a deep toolbox, with practitioners who all want more strategic influence. Understanding them — and knowing when product or service design is not the best approach — makes for a more well-rounded management consultant.
  • See the big picture. Sometimes design does have direct influence on business strategy. But describing that influence in terms of customer experience alone can lack the information that executives want to hear. Learning how to describe design’s benefits in financial and strategic language is key.
  • Be realistic about the influence of design. The current barrage of Fast Company and BusinessWeek stories on design can lull us into the impression that design is now king. In my experience, this isn’t anywhere near the case. Sure, there are great changes happening: I see more companies doing field research and more realization of the power of customer experience. But it’ll take years for the generations of business people to change their thinking and practices.
  • Know what you mean when you use the word strategy. Unfortunately, strategy has become a muddled word, the meaning even traditional management consultants don’t agree on (see Strategy Bites Back for an amusing look at the situation). But this is no excuse for us to practice muddled thinking. Here’s a simple way I’ve been clarifying it in conversation:
    • Product/service design: decide how to create something
    • Design strategy: decide what to create, with a perspective beyond the current cycle (e.g. 3-5 years)
    • Business strategy: decide what a business should do, with a perspective beyond the current cycle (e.g. 3-5 years)

I am in Love with John Hagel

…or at least his writing. In his latest post he offers an alternative to Porter’s three generic strategies and looks at the Siemens/BenQ situation through this lens

I have anticipated that all companies over time will unbundle into three much more focused business types – infrastructure management businesses, product innovation and commercialization businesses and customer relationship businesses.

…in my terminology, BenQ had become very successful as a focused infrastructure management business, leveraging not only low wage rates in Asia but rapid incremental innovation to deliver increasingly sophisticated and reliable products in markets around the world. It has developed world class capabilities in terms of managing high volume, routine processing activities and designing products for manufacturability.

All well and good – very consistent with the broader themes I have described. But the Siemens acquisition that took effect in October of 2005 came out of left field. Now BenQ was diversifying from a focused behind the scenes manufacturer and designer into a full-fledged product innovation and commercialization company with its own brands and distribution operations in Western companies.

He then widens this lens to look at Chinese businesses…

…Many Chinese companies unfortunately suffer from something that I have described as Western envy. Despite enormous success in pioneering innovative business models and business practices, many entrepreneurial Chinese companies still have a sense of inferiority and want to look like larger Western companies with their own manufacturing, R&D and sales and marketing operations. The irony is that, just as many Western companies are unbundling (in part offshoring and outsourcing to more focused Chinese companies), many Chinese executives are tempted to build more tightly bundled operations that mimic the model many Western companies are abandoning.

Idealized Design

Idealized design is a way of thinking about change that is deceptively simple to state: In solving problems of virtually any kind, the way to get the best outcome is to imagine what the ideal solution would be and then work backward to where you are today. This ensures that you do not erect imaginary obstacles before you even know what the ideal is.

…not unlike tangible futures.

Link courtesy of Austin.

IDEA Conference: A Super Design Mashup

I really like the idea behind the IDEA Conference: recognize that big D design is inherently a cross-disciplinary affair, so invite the smartest (not necessarily the most famous) speakers to illuminate the connections among us through their practical experience. Peter Merholz is instigating, so it’s sure to be bound up with tons of enthusiasm and intellectual goodness.

If you’re interested, you should know the discounted reg is ending soon.

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Categorized as Events

Leapfrogging

The fools at Fast Company lent me the keys to their blog last week. Here’s what I scrawled in lipstick on their bathroom mirror…

Once in while I hear someone talk about innovation as leapfrogging the competition. I love this phrase because it’s so bold. It not only says we are going to innovate on the level of products or processes or management, but also that we’re going to do it in a way that jumps forward to a generation beyond the competition. A leapfrog is the most ambitious an organization can be, and few organizations are actually equipped to make such a massive change. But leapfrogging as a creative exercise to expand our thinking can be a powerful tool.

Let’s say you’re a supermarket getting your lunch eaten by Whole Foods and you want to find an innovative new positioning. You could start by reverse engineering Whole Foods to figure out what makes them so successful and then imagine what it would take to ‘leapfrog’ that success. One way Whole Foods succeeded was by combining the progressive-but-ugly health food store with the attractive interior design and high quality merchandise of newer supermarkets. Lately they’ve also combined their stores with a vitamin store called Whole Foods Body. To leapfrog them you could brainstorm around the question, “What haven’t they combined yet?” One answer is exercise, as in diet and exercise — the keys to a healthy lifestyle. We see this combination happening as gyms open health food cafes, but this is on a smaller scale. The opportunity space for you is a modern, attractive gym and food market that combines the two in a way customers love.

How will your organization leapfrog the competition?

Tangible Futures in Denver, Wednesday, August 16th

I’ll be giving a presentation on Tangible Futures in Denver next Wednesday, August 16th. Since giving the talk in Philadelphia I’ve refined the how-to part of the talk quite a bit with more perspective of the people on the receiving end of this work. If you’re in the neighborhood and interested I’d love to meet you…

Tangible Futures: Creating Designs of the Future to Influence the Present

Edward de Bono has said, “You can analyse the past, but the future has to be designed.” As designers, we have influence not only over the products and services people will use in the future but also in how companies plan for the future. We can improve the quality of our influence by using our design skills to more actively anticipate and shape the future. Examples of this vary from auto designers’ concept cars to Bruce Mau’s Massive Change. These “tangible futures” act as a clear, compelling vision that helps organizations make progress.

More info…

What Works: Naps and Caffiene

Now here’s some advice I can follow…

What does work [to remedy jet lag]? “Napping and caffeine, among various solutions,” said Dr. Rosekind. “When I was at NASA, we did a study involving 26-minute naps and we found they boosted performance by 34 percent and alertness by 54 percent. Naps of less than a half-hour work.

“Using a combination of nap and caffeine is better than using them separately, if you can believe it. It takes 15 to 30 minutes for caffeine to kick in. So you do the two together. All it takes is a cup of coffee — not even a pill. By the time the caffeine is working, your nap is over.”

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Categorized as Humans