Tangible Futures example: Da Vinci’s flying machine

Leonardo Da Vinci possessed one of the greatest abilities to imagine the future potential for humans and work out these ideas as an engineer or designer would. It’s telling that we remember his drawings more readily than his words.

Here is his pen and ink drawing of A Flying Machine from 1490…

Tangible Futures example: Hugh Ferriss’s delineations

Imagine it is the year 1900 and you own a large corporation needing offices in a major city. You want to construct a building that makes a grand statement of your financial strength and contributes to the civic infrastructure. Currently the highest buildings are about 20 stories, but you are told new construction techniques are capable of building much higher. What would such a structure look and feel like? How much usable office space would there be? Would people want to work that high in the air?

Working within the constraints of new building codes and executives’ demands for bigger, more productive office space, Hugh Ferriss issued dramatic depictions of buildings that informed architects and inspired corporations. In his time, these illustrations were radically dramatic, opening the eyes of architects and corporations to the possibilities. Using the raw knowledge of architecture, he created a tangible vision and the visual language to understand the potential of skyscrapers. His style evolved to not only inform but also to elicit emotional reactions.

For a future you can conceive but not quite visualize, how might a film, a simulation, or a prototype business situation change your strategy?

Understanding the future in a tangible way

Tangible Futures, Part 1: Background

I’m starting a series of posts to talk about something we’re calling Tangible Futures, which are tangible expressions of visions for the future. That might sound quite ordinary or quite esoteric depending on your point of view, but having worked on it for several months I’m finding it to be a useful practice for the business community in a number of ways.

In this post I’ll try to tie together some important ideas that people have been brave enough to express:

Companies Need a Vision of the Future. John Hagel:

…Ask these same CEOs and their management teams two simple questions:

  1. What will your relevant markets look like five to ten years from now?
  2. What will your company need to do in order to thrive in these markets five to ten years from now?

Almost always, the answer will come back that there’s just too much uncertainty to have a clear point of view on this. But, here’s the rub: If the senior management team of a company doesn’t have a clear point of view on where the company is headed, why should investors put a lot of faith in the long-term performance of the company?

Business ideas must go beyond communication and help people change. David Maister:

The real question is: what are the methodologies that really help people change their lives when they understand messages like [Peter] Drucker’s and Tom [Peters]’s? What should they/we be doing differently with our books, our speeches, our videos? Is there a more effective way to actually help people change and make a difference on the world?

Strategic Change Is Useless Without Cultural Change. Tom Peters:

If Drucker and Bennis and Collins and Peters and Co… are/were so damn smart-wise, why is corporate performance so shabby in general?… Strategy don’t matter for diddly if the corporate culture is disfunctional or mis-aligned.

To combine these ideas, we could say that companies need a vision of the future that helps them achieve cultural change. This vision could help executives see future opportunities in a new way. The vision could help executives communicate these opportunities downward (or the reverse could happen, employees communicating opportunities upward).

But this doesn’t often happen now. Some of the problem has to do with the way strategies and forecasts are constructed, which I’ll address in an upcoming post. Some of the problem is simply a fault of the media employed: text and images can communicate ideas, but (at least in a business setting) fail to impart the richness of future situations. And they don’t spark strong emotional reactions that inspire people to care and act differently. We have richer, more interactive media at our disposal: film, theater, environments, computer simulation, and so on. It’s time to start employing them in the service of business strategy.

In the next few posts I’ll show some examples, look at how we can integrate this practice with futures studies, and talk a little about how we can start making tangible futures.

Business Innovation Factory

BIF is one of the few organizations of its type on the US East Coast: “The Business Innovation Factory is a community of innovators collaborating to explore… business model innovation through a series of experiences designed to get ideas off of the white board and onto the ground as quickly and cost effectively as possible. ” They have some interesting events coming up.

Open-source business sucks! No wait, it doesn’t!

Sigh. The current issue of the Economist has a story called “Open, but not as usual: As “open-source” models move beyond software into other businesses, their limitations are becoming apparent” which I had to read to learn about these limitations. But the article — while mentioning the usual glitches — is generally bullish on open-source business, praising it by the end of the article.

The tension in the article is derived from what seems to be common misunderstandings about open-source software, that 1) open doesn’t equal unstructured, and 2) open doesn’t equal innovation.

So after they duped me into reading the whole article I’ll refrain from honoring them with a link to spare you, dear reader, the trouble.

Apple’s R&D investment – too low or too high?

Innovation has nothing to do with how many R&D dollars you have. When Apple came up with the Mac, IBM was spending at least 100 times more on R&D. It’s not about money. It’s about the people you have, how you’re led, and how much you get it.
— Steve Jobs, Fortune, Nov. 9, 1998

This Street.com story on Apple’s under-investment in R&D has been making the rounds with the exclamation that more money does not equal more innovation. As a principle, I agree with that, and in fact it’s one of MIG’s axioms that “innovation is not expensive”. But by this we mean you can’t simply throw money at the problem, you have to tap into the capabilities of people. That said, money — especially to a hardware company with proprietary software — doesn’t hurt, and it’s worth looking more deeply into Apple’s situation to understand what’s going on.

  1. The Street article compares the most recent R&D spending as a percentage of sales (“While sales have grown at a compounded annual rate of 27% over the last four years, R&D spending has grown at an average rate of just 5.6% per year over that period.“). This masks the exponential increase in recent sales (65% net sales in Q4 2005). Since innovation is a function of how people work, scaling R&D simply to match sales could be futile and possibly harmful as an organizational development change. Just because accounting usually measures R&D as a percentage of sales doesn’t mean it should be managed that way.
  2. In absolute terms, Apple’s R&D investment is up $59 million in Q4 2005 over Q4 2004. For all we know this might be a good, sustainable R&D investment rate for them.
  3. The IDC analyst quoted in The Street article of course doesn’t know the reasons for the drop in R&D investment (nor do I). The article does mention an equally plausible theory is that Apple is learning how to be more innovative with less money, e.g. through management innovation that ultimately leads to other kinds of innovation. And isn’t doing more (sales) with less (R&D investment) a good thing?
  4. The comparison to other companies in Apple’s industry is a good idea, but the comparison is restricted to R&D as a percentage of sales. It ignores the effectiveness of that R&D investment vs. other factors and the directionality of the R&D-to-sales relationship. Just consider where, with regard to new markets, Apple is heading and where Sony is heading.
  5. Where the article really misses the point, IMHO, is by saying, “But even with all of Apple’s market and business prowess, the company is still, fundamentally, a technology company.” It may not be in the IT analysts’ interest to say so, but the nature of R&D investment is changing (at least in Apple’s industry) from solving tough technical problems to solving tough design problems.
  6. Finally, it’s ironic that analysts who have historically criticized Apple’s returns now criticize their frugality! I tend to think the traditional IT analysts will always find a way to not love warm, fuzzy Apple.

When everyone realizes Apple faces more design than technology issues, analysts will start to ask how much companies are spending on R&D of people rather than R&D of technology.

Shiny, happy, innovative people

…the business world is full of highly touted prescriptions for being more innovative… in my experience, few solutions actually address what I believe to be a fundamental enabler of innovative behavior in organizations… The key to unleashing innovative behavior is asking the question “how can I help each person in my organization achieve a state of happiness on a daily basis?” In other words, help happiness bloom, and innovative behavior will follow.


Happiness and the Art of Innovation

I’d say more is required — innovation is more than just working well, it’s taking risks to try the untried, which takes moxie — but the essence of this message is spot on: happiness is a prerequisite for good work, and managers are responsible for creating an environment where that’s possible (you can test this by asking, “What if you knew everything there was to know about innovation, but you worked for Dilbert’s boss?“). The Knowing-Doing Gap argues this at length, refuting the idea that mean-spirited management makes better workers.

Positive solutions that are neither left nor right

In this Bruce Mau talk on Global Creativity, he mostly discusses the Massive Change exhibit. But at the end he drops this, without making it clear how it’s tied in… (my paraphrasing)

Why are we seeing things on the political right and left that are both interesting? They should be at odds. What we realized is that there’s another political axis, and that’s what the project is about. There’s another axis at 90 degrees from the left and right which create a paradigm that is increasingly cumbersome and unproductive. And this new axis is about advanced and positive, rather than retrograde and not.

I sense the existence of this axis intuitively, but it’s difficult to conceptualize examples of this given the constant left-right framing we do. Days after hearing Mau I read Million-Dollar Murray by Malcolm Gladwell in The New Yorker. To summarize/spoil it, some issues in society have a power-law distribution with regard to how they harm us, rather than a normal bell-curve distribution. Gladwell illustrates this with the examples of homelessness, police brutality, and car pollution, all cases where a small percentage account for the overwhelmingly largest costs. In comparing this to our usual political methods for dealing with these problems, he finds real progress is at Mau’s axis, 90 degrees to the left and right…

Solving problems that have power-law distributions doesn’t just violate our moral intuitions; it violates our political intuitions as well. It’s hard not to conclude, in the end, that the reason we treated the homeless as one hopeless undifferentiated group for so long is not simply that we didn’t know better. It’s that we didn’t want to know better. It was easier the old way.

Power-law solutions have little appeal to the right, because they involve special treatment for people who do not deserve special treatment; and they have little appeal to the left, because their emphasis on efficiency over fairness suggests the cold number-crunching of Chicago-school cost-benefit analysis.

I have to think, religion aside, that Jesus was trying to tell us this a long time ago in the story of the father that welcomes back his prodigal son with a feast. Our political institutions are like the other brother who feels cheated, but the wise father knows it’s better to solve problems than manage them.

Books on European Innovation

A day after my recent musings, the Wall Street Journal looked at three books on European growth…

Cousins and Strangers is written by the last British governer to Hong Kong and a former EU commissioner. Most of the text seems to mirror the kind of Bush administration bashing that progressives in the US already do, so nothing new there. It could be interesting for Americans to better understand how Europeans view themselves in relation to the U.S.

In The Next Superpower? Rockwell Schnabel argues that the EU is a serious global economic force, and Americans need to pay heed. No argument there. He worries about overregulation and Europeans’ inability to take risk in order to make progress.

It’s Why Europe Will Run the 21st Century that looks like the really interesting read for its counter-intuitive stance. The author, Mark Leonard, points out that two billion people now live in Europe’s “zone of influence” and gradually adopt European ways of doing things. This includes the EU’s 80,000 pages of regulations which, while seeming to hobble flexibility on the surface, is also dramatically changing any country that must obey them upon entry to the EU. So whereas the U.S. uses force to achieve regime change in Afghanistan, Leonard argues that the new power will be softer, as with the EU’s peaceful transformation of “all of Polish society.

The Innovative Europe

Continuing on the Europe theme, I see a lot of potential for innovation there if the EU, governments, and companies are willing to address the current challenges with a view of the current situation as helpful constraints rather than roadblocks.

State-based benefits are a competitive advantage
that should be leveraged more. The obvious example is the advantage German car makers have when employees receive public health insurance vs. American car makers allocating more and more money to rising health care costs. Modifying these benefits could encourage a “free agent nation” where talented individuals can freely move from contract to contract. Many people will feel a personal insecurity about this compared to a regular job, but the government can show the way by putting the right policies in place now. America, ironically, is behind on this issue by continuing to tie health, retirement, and other benefits to a particular job (usually at medium or large companies only).

Europe should embrace immigration
for all the benefits of diversity that America enjoys. It’s not an easy road, but with the example of America’s civil rights movement and South Africa’s apartheid behind us, Europe is not blazing a new trail here. France’s elitism results in rioting, Germany’s prejudice results in conflict, and the Danish media is mistaking blasphemy with freedom of the press. The EU and member nations need to see integration as inevitable and be more sensitive, sophisticated, and progressive about sharing their cultures. Power needs to be shared and will be over time, the question is only whether it’s a difficult process or not.

Preserving culture vs. benefiting from globalism is a false dichotomy, and the media’s representation of the issue as protestors against free-market purists isn’t helping any. Each region needs to think about preserving what’s important to them and preserve it, while doing what is necessary to remain economically viable. Tuscany is a great example of putting very strict architectural restrictions in place while encouraging tourism. They don’t profit from giant tourist attractions, but they have built one amazing brand that is proving resilient.

Unions (and worker’s councils) must become a competitive advantage rather than a source of friction. Again, management needs to recognize they share power with unions and leverage that relationship through collaboration to improve their operations. This is not a new road as the Japanese have already shown us the way with relationships of higher respect and processes that value collaboration and constant feedback (e.g. the Toyota Production System).

Who’s innovating?

While pretty much everyone everywhere is freaking out about the future rich country status of China and India (can you say self-fulfilling prophesy?), the ability to innovate is what will keep the rich countries rich. So who’s innovating? According to this EU report, the innovation leaders are

  1. Sweden
  2. Switzerland
  3. Finland
  4. Japan
  5. Germany
  6. United States
  7. Denmark

…in that order. But of course it’s the most shocking sound bite that has gotten all the attention: “…would trends for the 25 EU Member States remain stable, the gap with the US will not close within the next 50 years.” But focusing on the US generates the wrong metric. I tend to find everyone I know — in the US and Europe — underestimates how the EU influences European prosperity. It’s rarely ever discussed here in the US, but Europe is gradually building the kind of large, diverse trading environment that exists in the United States, trading not only goods but knowledge and expertise. A metric I’d like to see is the amount of innovation before and after EU initiatives, and how trading labor costs for knowledge across borders can bring innovation from the high innovation areas to the low innovation areas.

Everything written about innovation is shitty and useless

Walking home from work tonight I was thinking that most everything written about innovation is useless. It’s generic banter. Fixing companies must be done in the context of their problems by people passionate enough to constantly push against the dead weight of status quo.

If we learn anything useful from the Tom Peters of this world, it’s the need for passion. Arriving home I read, hot on the heels of Culture eats strategy for breakfast, this beauty from Tom Peters…

If Drucker and Bennis and Collins and Peters and Co. (charter members of Guru Nation) are/were so damn smart-wise, why is corporate performance so shabby in general? …the “solutions” were not actionable by “real people” under stress….

Strategy don’t matter for diddly if the “corporate culture” [an anathema word at McKinsey at the time], is disfunctional/mis-aligned.” That is, if the “strategy” ain’t implementable, it’s de facto a shitty-useless strategy.

The Innovate-Dominate Imperative

This essay by Ray Lane of Kleiner Perkins offers some useful models of the software industry that could easily apply to similar industries in a state of major transition.

This year, many software companies will be busy trying to convert their offerings from products into services. In fact, I would estimate that last year, software-as-a-service (SaaS) was the number one item on the agenda of 70 percent of software executives.

I’m here to tell you that this is a mistake.

…The enterprise software companies that move to innovate and dominate today will be the most successful companies five years from now.

software company size and innovation

The Anti-Trend

Springwise offers a handy heuristic for forecasting…

Talk about conflicting trends: domestic outsourcing is more popular than ever, yet at the same time consumers are DIY-ing like there’s no tomorrow: as a hobby or to save money. For every trend, there’s an anti-trend!