Noise Between Stations

  • Can Web 2.0 Help Anyone Dabble in I.T.?

    While discussions of Web 2.0 in the popular press center around the cool technology — and it is pretty cool — the more interesting aspects for me are the changes we’ll see in how people relate to information in fundamentally different ways as companies move from creating products to creating tools.

    One ubiquitous software app at the heart of our systems is the database, and along with it is the ubiquitous understanding that mere mortals do not create databases, we need database programmers to do that. Along comes Dabble to change that, at least (for the time being) at the simpler end of applications. Watching their demo video it’s easy to imagine the day when any business person will create database-backed web applications as easily as we set up spreadsheets today.

  • Creating Strategy in an Unknowable Universe

    At Overlap there was a running side conversation about using real options to evaluate product investments. Eric Beinhocker explores a similar idea on the scale of business plans in Creating Strategy in an Unknowable Universe, a summary of his book The Origin of Wealth. Here’s an excerpt:

    Rather than thinking of strategy as a single plan built on predictions of the future, we should think of strategy as a portfolio of experiments, a population of competing Business Plans that evolves over time… an example will help illustrate what a portfolio of strategic experiments looks like…

    Rather than try to predict the future, [Bill] Gates created a population of competing Business Plans within Microsoft that mirrored the evolutionary competition going on outside in the marketplace. Microsoft thus was able to evolve its way into the future. Eventually, each of the other initiatives was killed off or scaled down, and Windows was amplified to become the focus of the company’s operating-system efforts.

    Of course the idea of thoughtfully managing multiple businesses has been around at least since BCG’s matrix, but Beinhocker describes this at the innovation phase rather than the maturity phase. This requres a less analytic, more opportunistic approach that simultaneously relies on the creativity needed to generate new businesses and the discpline to gently tweak investments over time.

    Beinhocker providers a hard look at the difficulties in pursuing a strategy that appears to outsiders like a jumble of half-baked ideas. We’ve been facing these issues in our client engagements, helping companies think beyond the traditional financial business case and reframe investment decisions through an evolutionary lens. I’ll have to read the book to see how much of this he’s already addressed.

  • Tangibly understanding your retirement

    Our retirement is one topic where all of us think many years into the future. In my tangible futures presentation I’ve been showing a typical screen from my online retirement account. It shows how much money I have saved, where it’s invested, the rate of return, my asset allocation, and so on. It’s a great tool for helping me understand my investments, but it fails to help me understand what I’m saving for, and therefore if I’ll have enough money to retire the way I’d like.

    Then I show a more tangible concept I like to call Cancun 2035:

    It’s just a concept, but immediately it signals to me what a great retirement I have awaiting me and how close I am to it financially. I don’t know if Cancun will actually be a nice place to retire to in 2035, or how much it will cost, or what the rate of inflation is, but my financial services company can help me with that. Then they’d be my retirement services company, a big identity and capability change for an organization, but one that might be facilitated by creating a new vision for themselves using a tangible future like this one.

    Recently I noticed Ameriprise is giving away a Dream Book that does help you plan for what you’ll do in retirement. Unfortunately the book is mostly text and not more tangible, but they’re headed in the right direction.

  • Why design thinking is so hard for designers

    “You can’t make somebody understand something if their salary depends upon them not understanding it.”

    In our exploration of design thinking some people assume that it is the kind of thinking that designers do, but unfortunately this isn’t usually the case. For several reasons designers are predisposed against integrative ways of thinking.

    To explain I’ll cite the example of the internal effort to fix the horrendous user interfaces of SAP’s software. A Wall St Journal article ($) this week quoted people at the company admitting to the poor design quality and describing their in-house effort to educate SAP’s engineers to be more sensitive to users’ needs. This is the designer’s goal: to design better products. A design thinker on the other hand might look at the whole system, observe that SAP has been so bad at designing UIs for so long that a massive culture change would need to take place before managers allocated the kind of resources needed to achieve significantly better designs. While this would be great, the design thinker would explore the option that UI design is not a capability that SAP should develop. One would ask if partners and customers are better equipped to design the UIs, and if SAP should simply build APIs into all the products. Would a director of design at SAP come to this conclusion? Maybe, but designers aren’t looking in this direction; doing so jeapardizes their ability to create interesting artifacts as well as the security of their jobs.

    Another example is the revived discusion about working on spec, which rarely gets beyond a binary judgement of for or against. If one looks at the entire system, we see that clients have many options these days regardless of how designers like to structure engagements, presenting market forces that could ‘creatively destroy’ old transaction models. The design thinker would recognize this new reality, generate new approaches, and start experimenting. In the BusinessWeek case the job was relatively simple. Why not, for example, split the budget into three parts and commission three designs from three different firms? Each firm would have to invent a process that was profitable but is assured of being compensated, and the client still has a number of artifacts to choose from. This approach doesn’t heap glory and profit upon any one design firm so they probably wouldn’t suggest it, even if it could be better for the system overall.

  • Hyundai Brand Evolution

    Hyundai successfully entered the U.S. market as a low-cost competitor, became established, and has even started to offer an affordable luxury model. And now a recent J.D. Power report listing them as the No. 1 non-premium auto maker in terms of perceived quality, ahead of previous frontrunner Toyota.

    But when you’re known for being the cheap option, how to you re-educate the market? (While Hyundai’s products are not of the disruptive variety, I’m interested in this challenge because it confronts the typical disruptive innovator.) This Gazelle vs. Lion 30-second commercial from The Richards Group should definitely help.

  • Successful small business units, schools

    William G. Ouchi on decentralized management:

    I had spent 35 years studying the management of very large companies, and one of the most consistent principles is decentralization. In a competitive world, you must make decisions in the smallest operating units possible, or you will go out of business…

    …We have a research project under way now in which we’re interviewing 527 principals with local autonomy and visiting their schools. We’re focusing on inner-city high schools, which have proven in the past to be the hardest schools to improve. We’re finding that control over the budget gives principals control over three key school decisions: the staffing mixture, curriculum, and schedule.

  • The Neuroscience of Leadership

    I agree with Ed when he says of The Neuroscience of Leadership “it’s an outstanding piece of work, well worth your time” but that the authors’ critique of humanism is both lame and unnecessary.

  • Creating organizational vision with storytelling and artifacts

    “The Institute for the Future couldn’t get clients to read its trend forecasts. So it started giving away prescient product ideas instead.”

    These are great examples of the tangible part of what we’ve been calling Tangible Futures. The IFTF objects seem like good ways to, as they say, ‘start conversations’ about alternate futures. The intention behind our Tangible Futures is a little different. We want to help change the way organizations think about their capabilities and identity so they’re more capable of innovating. The one key difference is that instead of making the artifacts ourselves we think these artifacts are more likely to result in actual innovation if we help companies create their own artifacts. More on this in a moment.

    In either case, the conundrum is that we need the tangible artifacts to stimulate the imagination, but then we need to immediately focus away from the artifact to what is required internally for an organization to produce it.

    Why? Because innovative companies make innovative products. That sounds obvious, but some companies want to ignore the company part and jump right to the products. To illustrate the difference, consider (surprise) the iPod. Is the difference between the iPod/iTunes ecosystem that Apple had a better idea than everyone else? No. Other companies had already released components of this system, such as hard drive-based mp3 players and online music stores. Sony in particular was the logical one to lead the way, since they possess significantly more portable electronics design, manufacturing, distribution, and retail expertise than Apple. Sony also happens to own a handful of record companies. Apple’s advantage comes down to management innovation. They took smart risks and created effective collaboration across disciplines and groups, where is one place Sony definitely failed. Regardless of which was the better product, the more innovative company won.

    Artifacts from the future are highly useful to inspire us into action, but ultimately the challenge is managing people to execute on the innovative ideas. How do we get beyond the focus on the artifact? One approach could be to embed the artifact within a strong story. To use a classic example, we can conjure the story of Adam & Eve using the apple with two bites taken from it. The apple is an artifact that represents a wealth of concepts, and yet our focus is not on the apple, it’s on the people and events.

    To develop a corporate vision, scenario planning is a great way for groups to co-create stories about the future. If at the same time the groups create artifacts that conjure those stories, they possess a tangible conveyance, communicating the vision necessary for others to align their work in the same direction. That’s what Tangible Futures is all about.

  • The Five Functions of a Team

    In retrospect, when Christina bought me a copy a The Five Dysfunctions of a Team, there were a few reasons it didn’t exactly rise to the top of my to-read pile: It addresses a non-fiction topic in the form of a story, which can sometimes feel contrived. It looks at the topic through a negative lens, which rubs optimist-me the wrong way. And if all that weren’t bad enough, it has a number in the title.

    I’m glad I got over all that, because it’s a very good little book, a very fast read that offers a simple but powerful model to help groups of people work together with the trust and commitment needed of a team. The negative perspective is actually effective in highlighting poor team behavior. Though having absorbed it, I’m trying to put it into action using the positive version the author offers toward the end, which one might call the Five Functions of a Team…

  • The cost of iteration

    Iterating on paper? Cheap.

    Iterating in software? Still pretty cheap.

    Iterating the Airbus A380? Not so cheap: “Airbus said Tuesday that it would produce only 9 of its giant new A380 jets next year, not the 25 planned, because of numerous design changes…. Small changes, like moving small pieces of equipment, were cascading through the system and creating the need for additional adjustments in wiring…”

    This simple idea, illustrated in painful penalties and time-to-market costs for Airbus, is elegantly expanded upon in Austin and Devin’s book Artful Making. The authors — one a business professor and the other a theater professor — contrast the cost of iteration with the cost of exploration, look at its use in industrial and knowledge work, and how the iteration cost curve changes over a project.

    In general the book is a wonderful look at applying “artful” (i.e. design or craft) ways of working to knowledge work, which is what business design is in large part all about. I’ve been recommending it to everyone.

  • GE dares to dream of the future

    In my tangible futures presentation last week, I repeated a statement I’ve written here, that sometime during the second half of the 20th century, American companies forgot how to dream. I’m happy to contradict that statement with a clear example: GE.

    In Growth as a Process, Jeffrey Immelt reveals the process that led to their Ecomagination initiative. Not only is it not greenwashing or a flimsy vision statement, it grew out of their strategic planning process and has metrics that benefit the company and the environment, while bravely looking several years into the future.

    The whole article is full of valuable insights, but this section is worth quoting:

    The very economics [of scarcity], by the way, that drove you to read the demand for organic growth. You’re trying to make tailwind out of the headwind.

    Exactly right. So we plugged that input from S-1 [GE’s strategic planning process] into the Commercial Council, which studied it for nine months. We met with people from NGOs, government offices, and other relevant organizations. We brought a lot of assets together, including our knowledge of public policy and how it gets influenced. Once we had done our homework, we launched ecomagination with 17 products we could point to. As always, we were metric driven. We said that our $10 billion of revenue from products tapping renewable energy sources like the sun and wind had to go to $20 billion in five years. The $750 million we were spending on R&D for clean technologies had to go to a billion and a half. Our own greenhouse gas emissions had to come down by 1% by 2012.


    Has there been any push back from your customers, some of whom I can imagine would rather stick to their carbon-burning ways?

    There were plenty of guys on our energy team who hated this in the beginning because half of their customers were saying they hated it. Never mind that half of the customers loved it. We just kept talking: “Here’s where we’re going. Here’s why we think it’s good for both of us. And it’s going to come someday anyhow, so let’s get ahead of it.” We hosted what we call a dreaming session in the summer of 2004 with the 30 biggest utilities. Some of the top players in the industry—CEOs like Jim Rogers and David Rutledge—came to Crotonville and heard Jeff Sachs from Columbia talk about global warming. There were other speakers who were pretty compelling on different topics, and breakout sessions. I floated the idea of doing something on public policy on greenhouse gases, and we had a good debate.

    In part, ecomagination helped to show the organization that we can do these things. The company has been great in terms of management practice but more reluctant when it comes to what I would call business innovation. Ecomagination was one way to show the organization that it’s OK to stick your neck out and even to make customers a little bit uncomfortable.

  • Female masters of innovation

    Last year I went back to Jeanne Lietdke’s Strategy as Design article for a second, close reading. One thought I came away with was, “It’s not too surprising this has come from a woman. The creative embrace of conflict, the willingness to stay in the problem space, the lack of need to control a situation and instead turn it into a new situation… it intuitively feels right that a woman would write that piece.” My colleagues — male and female — thought I was nuts for saying so. I know these aren’t exclusively female qualities, but I see them more often in women than men.

    I thought of this just now looking at IN’s 25 Masters of Innovation. 17 of the 25 are women. I don’t want to draw any conclusion from this, but it’s another interesting data point.

  • Prediction markets blog

    My friend and former co-worker Alex Kirtland is reviewing public prediction markets on his blog. Given how important a clear understanding of the market is to the accuracy of participants’ voting, I appreciate the POV of someone like Alex who groks good digital design.

  • Two New Biz Mags: IN and Portfolio

    I believe IN launches as an insert inside BusinessWeek today, while Conde announced Portfolio (also see the NY Times introduction). The editors say the latter will be serious, long-form journalism. We’ll see if it’s more Wired or more New Yorker.

  • Stewart: ultimately, it’s all about values, and not an MBA

    The Management Myth by Matthew Stewart argues against the value of Winslow Taylor’s methods, an MBA education, and much of management theory. His tone is often snarky and flip, which is a shame because it undermines the delivery of some great ideas, such as this discussion of values:

    …as anyone who has studied Aristotle will know, “Values” aren’t something you bump into from time to time during the course of a business career. All of business is about values, all of the time. Notwithstanding the ostentatious use of stopwatches, Taylor’s pig iron case was not a description of some aspect of physical reality — how many tons can a worker lift? It was a prescription — how many tons should a worker lift? The real issue at stake in Mayo’s telephone factory was not factual — how can we best establish a sense of teamwork? It was moral — how much of a worker’s sense of identity and well-being does a business have a right to harness for its purposes?

    Someone else pointed this out to me recently by saying, “We know that McDonald’s has values. Because if they didn’t, they’d be selling crack.“