• Funding and the Innovator’s Dilemma

    I’ve talked with several people who are heads of business units who have faced up to the what of the innovator’s dilemma but aren’t sure about the how. They have the determination to make difficult changes in how they serve their customers. They have P&L responsibility, but not necessarily a large scale budget that allows them to create whole new departments to do the new work. And although they’re willing to supplant their cash cows, they need that revenue until the new offerings bring in new revenue.

    So the main obstacle — innovation being mostly about the great management of great people — is finding resources that enable people to work on new development projects. Since it’s a common and important issue, I’ve started a list of the approaches that I use in addressing the problem. They’re mostly common sense, but hopefully will facilitate conversations to find a workable approach…

    Add Resources Set a business goal such as increased market share or revenue from new products. Express this goal in the context of what is important to the company, such as how the goal contributes to overall positioning, or a financial model that specifies what constitutes a desirable financial return. Use this goal+context to justify investing in additional resources.

    Re-Allocate Company Resources Determine what existing products and services are undesirable (e.g. “dogs”) and make the executive decision to discontinue them, re-allocating resources to new development.

    Re-Allocate R&D Resources Benchmark the effectiveness of current R&D spending. Then allocate a small portion of existing R&D funding to the new development activities. Measure the effectiveness of the new activities and compare that to the benchmark, re-allocating funds as appropriate.

    Share Resources Share new development costs with a partner who is interested in sharing the results.

    Divide Resources Use existing resources in a lean way, such as devoting a portion of time each week to new development. Google does this by allowing employees to work on new projects every Friday.

    Add Activites If the new development involves novel activities and techniques, start integrating these into existing work. Try different approaches and find what works in small, low-risk ways. Establish a comfortable, gradual approach leading up to bigger changes; help everyone feel more comfortable devoting more resources down the line once they’ve achieved some small victories.


  • Futures studies and the importance of ‘images’

    Tangible Futures, Part 2: The historical context

    The Wilson Quarterly’s Winter 2006 issue focuses on future studies and includes this historical review, Has Futurism Failed? In it the authors cite several practitioners hailing the importance of our images of the future. To me this could include our science fiction, our movies, and our political rhetoric, as well as our vision for business. Here’s an excerpt:

    …widely shared images of the future can sometimes open up large new realms of behavior possibilities, creating chain reactions of self-organizing change. This insight actually emerged in some of the early work in future studies. The economist Kenneth Boulding put the matter clearly: “The human condition can almost be summed up in the observation that, whereas all experiences are of the past, all decisions are about the future. The image of the future, therefore, is the key to all choice-oriented behavior. The character and quality of the images of the future which prevail in a society are therefore the most important clue to its overall dynamics.”


  • Tangible Futures example: Futurama

    Sometime during the second half of the 20th century, American companies forgot how to dream. The social and political upheaval of the 1960’s and 1970’s may have squelched the raw optimism of previous decades, but this only made the need for inspiring visions even more important in the face of new, complex business environments.

    In 1940 General Motors offeredFuturama” as their vision of the future. It went beyond automotive design, delineating plans for a new kind of city to accommodate increased auto usage, as with the elevated walkways below. In hindsight it’s easy to criticize this particular vision, but I’m sure it inspired employees and customers with an optimistic, realistic vision which the company could work towards.

    Norman Bel Geddes, “Magic Motorways” from GM’s Futurama: Pedestrians and motorcars will continue on their way without interference.


  • Tangible Futures example: Earth from space

    Stewart Brand knew the power of this photograph before it was publicly released. In 1966, “…he sold buttons which read, ‘Why Haven’t We Seen A Photograph of the Whole Earth Yet?’ Legend has it that this accelerated NASA’s making good color photos of Earth from distant space during the Apollo program and that the ecology movement took shape in 1968-9 partially as a result of those photos.

    Of course, the photo represented the present state of earth. And technically — like any photograph — it represents the past. But by showing us a whole new perspective, it conjured new ideas about how we share one planet rather than inhabit separate nations. It’s a powerful, tangible representation that implies potential for the future.


  • 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.


  • Wal-Mart enters the consulting biz

    This is interesting…

    Wal-Mart Stores, whose all-in-one retailing model has forced scores of competitors to close their doors over the last 40 years, is turning to an unusual business plan: helping its rivals.

    The giant discount retailer, under increasing assault by critics, announced a wide-ranging effort yesterday to support small businesses near its new urban stores, including the hardware stores, dress shops and bakeries with which it competes.

    Wal-Mart said it would offer those businesses financial grants, training on how to survive with Wal-Mart in town and even free advertising within a Wal-Mart store.

    Wal-Mart will hold seminars to coach the businesses on how to compete with the giant discount stores — by, for example, intensifying customer service, for which Wal-Mart often receives low marks. An annual report on trends in Wal-Mart’s business will be distributed exclusively to those companies.

    Setting cynical PR claims aside, this plan both makes a lot of sense and very little sense. Teaching businesses unfamiliar with differentiation is great, and just what they need to compete with Wal-Mart. But who wants customer service advice from a company that sucks at customer service? I’d bet the best form of training would be a collection of video case studies (no classrooms, no books) of small businesses that continued to succeed even after Wal-Mart came to town. Simply amplifying messages from managers of successful small businesses will be more valuable — and more authentic — than anything Wal-Mart itself could say.


  • Hire us, Forrester says so

    Though we probably wouldn’t refer to ourselves as a design agency, these are kinds words from the folks in Cambridge…

    Tap design agencies for a jump-start on culture and process.
    Many companies turn to outside agencies for help designing self-service channels or products — but the more lasting value of the partnership is often the agency’s ability to influence its client’s culture and process. In addition to sharing their design methodologies, agencies can help clients navigate politically dangerous waters, get people in different organizations talking to each other, and break down barriers to conflict resolution. Seek out agencies — like Management Innovation Group — that actively aim to improve corporate culture and process through design projects.

    from Culture And Process Drive Better Customer Experiences


  • 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.


  • Good Crazy and Bad Crazy

    My MIG colleague Scott Hirsch recorded a podcast with PodTech and discussed technology-focused startups that drive by the rear-view mirror, open vs. closed networks, and why it’s the crazy-brave people that drive innovation.


  • Homogeneous Architecture

    My business partner Jim just returned from doing a presentation in Turkey. Notable comment: “Istanbul looks more like San Jose than Constantinople.


  • In Vancouver

    I’m in lovely tho’ rainy Vancouver to co-teach our seminar. If you’re in the area do come by and say hello.


  • Charan’s “10 Tools of Profitable Revenue Growth”

    Ram Charan’s book Profitable Growth Is Everyone’s Business seems to be closely related to (and a summation of) Peters and Waterman’s In Search Of Excellence. Charan’s book in turn is summed up on his site.


  • Do the easiest thing that could possibly work – First Draft

    When you have a new idea and you’re not sure it will work, create a tangible version of it as quickly as humanly possible. Even if it is very rough, something tangible helps you reach a solution.

    I’m sure you’ve been in this situation. There’s an important problem that needs to be solved before the team can move on with other work. It’s a complex issue, maybe it’s charged with emotions, and no one has an answer. You and your team stare at the paper, out the window, or up at the ceiling wondering how anyone could possibly purchase such an ugly light fixture. Short of the day ending or receiving divine inspiration, it is at this point that you should pick up a pencil/marker/keyboard/tool/whatever and do the easiest thing you can imagine that would solve the problem.

    When you’re trying to solve a problem and you’re stuck it’s because you’re trying to solve it in your head. Just as you can do simple calculations in your head but need a calculator for everything else, you can’t solve tough business problems in your head.

    When you draw, build, write, or use something that is physical, your physical senses help you understand more about the situation. You more fully understand the problem than if you only thought about it. Financial analysts do this by writing calculations on the back of a napkin or playing with numbers in a spreadsheet. Designers do this by sketching on paper or carving foam in the shape of a product. Engineers do it by combining parts they have on hand to make something new.

    This is not about conceiving a six billion dollar payroll system or a drug that cures cancer. It’s a way to make progress on one particular idea. It’s about making a physical thing you create quickly, learn from, and throw away.

    It’s important to ignore how well you’re doing what you’re doing, because that will distract you from accomplishing the goal. This may go against our usual inclinations to do things “right.” We’re taught to think things through and carefully design a solution. But when you’re stuck we need to overcome this tendency. Free your mind from all the rules you normally follow. Pick up the pencil and just sketch.

    You might even use techniques you know to be incorrect because they help you move more quickly. This is good. The are only two guidelines here:

    1. Do it quickly
    2. Create something tangible

    Try it now

    When faced with a tough problem, start by working with the familiar, asking, “Is there something that already exists that addresses this problem? What sorts of things that already exist might address this problem?”

    It may help – even just to save face in front of co-workers – to start by saying out loud as you grab the pencil, “This is something we’ll throw away later, but for now let’s try drawing something that will solve the problem. We can create the actual solution later.”

    ——

    This has been adapted from:

    The Simplest Thing that Could Possibly Work, A Conversation with Ward Cunningham, Part V, by Bill Venners, January 19, 2004

    Simplest or Easiest