About twelve months ago I gave up drinking pop for the third time – or soda, if you’re like my wife Nancy (if you’re from the US, check this out for why this is such a point of contention).  The previous two times I stayed off the wagon for as long as nine months, then fell back into the habit.

This time, it seems to have stuck.  And I think I know why – I finally figured out what I actually wanted.

There are two separate issues for me with soft drinks.  The first is that they’ve always been a treat.  When I was growing up, we never had them in the house.  I still remember the first time I ever drank one – I was about 9, and I was out with my Dad in the wilds of Alaska for most of the day hiking around.  At the end of the day, we stopped at a store and he bought me a can of Dr. Pepper.

It was glorious!

Ever since then, pop has been a treat for me, at least in my subconscious.

What is Coke Selling?

But that’s not why I kept backsliding.  The reason I’ve been able to stay off the pop this time around is that I finally figured out what I was buying – I was buying cold.

The previous times that I started drinking pop again were both in the summer – when it’s pretty hot and humid here in Brisbane.

There’s an interesting post on the NPR website describing how Coca-Cola has been promoting Coke in Myanmar, a country that it hasn’t been in for sixty years.  The first step is to start advertising.  To do that, they’ve resuscitated the original campaigns that they used to launch the product back in the 19th century – the ones that emphasise that Coke is “delicious, and refreshing.”

Once they get peoples’ attention, then they give them samples.  Here is the process:

Myanmar has spotty electricity and bad refrigerators. Coca-Cola was worried that people were trying Coke at room temperature. At the tastings, everyone gets an ice-cold bottle of Coke, and instructions on the proper way to drink Coke — a five point plan for deliciousness:

1) Get a glass.

2) Chill the bottle.

3) Put three cubes of ice in the glass.

4) Pour at a 45 degree angle.

5) Add a dash of lime.

A shorter version of the advice is on the back of the bottle. In fact, all the marketing messages, the slogans, the history of Coke, and the ice-cold mandate are all squeezed onto the bottle.

Think about this for a second.  Coke can probably pass for delicious in a country that doesn’t have a high-sugar diet, but everything else revolves around selling cold.  ”Refreshing” = “cold” – and the bottle needs to be chilled, and the Coke served with ice.

People aren’t buying the taste, they’re buying the cold.

I thought of this when I saw yet another spate of articles this weekend about how bottled water is a big ripoff because it’s often just the same as tap water, but astronomically more expensive.  Well, yeah, it is.  But people aren’t completely stupid, so why are they buying bottled water.

Most of the time, they’re buying cold.

People Don’t Know What They Want

There are some interesting innovation angles to this story, including:

• People don’t know what they want. It was only when I realised that I was buying cold that I figured out how to break my addiction to pop.  I made plans to have access to cold, refreshing tap water as much of the time as possible.  I’ve got chilled bottles at home, in the office, and Nancy & bring them with us to the car every morning.  The entire problem is that I didn’t actually know what I wanted.
  
• You can discover what people through design thinking, or ethnography.  If you had asked me in a focus group why I drank pop, I couldn’t have told you.  So if you’re looking for innovation opportunities, what can you do?  Two tools that help are design thinking and ethnography.  These approaches are both designed to learn what people want through observation, rather than analysis.  Or asking them.  These approaches can both be used in the jobs-to-be-done approach.  In my case, the actual job I’m hiring soft drinks to do is to cool me down via a cold refreshing drink.  Once I realised this, I found better ways to get that job done.  If you can identify these better ways, you’ve spotted an innovation opportunity.
• You can also learn through experiments.  If the other approaches don’t appeal to you, then you can tackle the problem by making small bets, and learning through experiments.  The roots of selling cold go back more than 100 years.  Coke originally took off when the US market looked a lot like Myanmar’s does now. Home refrigeration didn’t exist, so you had to buy cold drinks from a store (it’s no coincidence that Coca-Cola comes from the South of the US).  The market has changed a lot since then, and the original reason for buying Coke has mostly disappeared.  It’s pretty easy to get cold drinks anywhere now. When the reason for an action is so deeply buried in history and habit, it’s hard to figure out how to change that action. It’s a mystery. If you face a mystery, and you need to innovate, then experiment.

There are plenty of good reasons to stop drinking pop.  I only managed to do it once I figured out what I was actually buying.

Of course, the other aspect of this was the emotional one.  Fortunately, I’ve done lots of great stuff with my Dad over the years. So I don’t need to drink a Dr Pepper to remember them.

Although, every time I drink one, it reminds me of that first one.  I can’t even figure myself out, so how can I figure out what other people are going do? That’s an innovation challenge.

I think I’ll head over to my refrigerator, grab my bottle of cold water, and give it some thought.

(Photo from flickr/Felix_Idan under a Creative Commons License)

Related articles

• How To Sell Coke To People Who Have Never Had A Sip
• Coca-Cola Making Bottles Entirely Out of Ice Just in Time for Summer

The post Innovation Opportunity: People Don’t Know What They Want appeared first on Innovation for Growth.

While they found some exceptional firms that are taking full advantage of digital tools, overall the results weren’t great.  Here is what John said about the challenge facing the firms that are lagging behind:

Irrespective of industry sector and business size, digital is transforming business. Traditional businesses are being disrupted and new models are emerging. The challenge that businesses must rise to is not technical.

It’s about designing a differentiated end-to-end customer experience. It’s about integrating multiple channels of delivery, seamlessly, and accelerating the digitisation of business operations.

The report is well worth reading – the issue of how to best integrate digital tools with your overall strategy is critically important.  The rest of this post comes from Gerald Marion of Ernst & Young, who talks about the results of the survey:

Gerald Marion

The digitisation of everything is disrupting established industries and business models at an accelerated pace, making disruption the norm rather than the odd event. New winners and models are emerging, rewriting in the process, the rules of engagement and what success looks like. The centre of gravity is shifting for both government and businesses from ‘acquiring and managing scarce resources through an industrial model’ to the ‘ability to mobilise resources in an interconnected digitised ecosystem without often owning them and engaging customers as co-creators of their own experience through the creative model’.

The dominant Industrial model often referred to as the traditional economy is rapidly declining whilst the Creative economy is growing. How to stay relevant and grow in the emerging Creative economy is a business model challenge. Going digital is a means to an end, not the end. In a recent digital capability maturity study* of 500 businesses we recently conducted in collaboration with our colleague researchers from UQ Business School, we concluded that “irrespective of industry sector and business size, there is an urgent need for businesses to transform their existing business model digitally and uplift their business capability to compete. The challenge ahead is not a technology one but rather:

(i) designing a differentiated end-to-end customer experience, involving customers as co-creators
(ii) seamlessly integrating multiple channels of delivery with a focus on meaningful engagement
(iii) accelerating the digitisation of business operations including a rethink of the supply chain.”

We also conducted 25 detailed case study interviews of companies such as Virgin Australia, Flight Centre, Wotif, Domino’s, Charmhealth, Immersaview among others. While some of the case studies revealed how digital transformation can create a radical shift in their business model, most showed that digital capabilities can augment a customer- focused strategy.

Think, Engage, Conquer
In thinking how best to approach your business model challenge in the creative economy, there are 6 points you should consider:

1. Rethink how value is being created: take a ‘genuine outside-in’ view rather than an ‘inside-out’ view and reset your default assumptions.

2. Engage your customers in a continuous two-way dialogue. Customers are self-educating themselves faster than businesses are.

3. Transition from ‘command and control’ to ‘open- networked innovation’ through collaborative networks. Become an ‘intelligent owner’ excelling at coordination.

4. Choose less bureaucracy, more devolved leadership: the current governance models are not adapted to an interconnected ecosystem.

5. Use data to make timely decisions: you will be judged on your ability to make good decisions on imperfect data not in building the perfect infrastructure. Data is abundant.

6. Invest in your workforce capability: the human capital disconnect is a growing risk and requires a system-wide response involving Universities and VET providers.

In conclusion: Disrupt before being disrupted.
Look beyond your industry for ideas but also for who is your next emerging competitor. The assumptions you have been operating on may not hold true for long.

* About the study: As part of the study, EY and UQ Business School collaborated to co-develop a Digital Capability Maturity Framework, composed of eight dimensions. These dimensions are ordered as follows: 1. Digital Strategy, 2.  Customer experience, 3. Design, 4. Meaningful content, 5. Channels integration, 6. Operations, 7. Governance, 8. Digital infrastructure. 800 businesses were targeted via a phone-based survey. 50 companies were identified as possible case studies and 25 were selected and interviewed face to face including companies such as Virgin Australia, Flight Centre, Wotif, ePharmacy, Terry White chemists, Domino’s among others. The research team from UQ Business School was composed of: Associate Professors Marta Indulska and John Steen, Dr Martie-Louise Verreynne.

Note: Gerald’s post originally appeared on the Morgan McKinley blog.

The post How Do Digital Tools and Strategy Interact? appeared first on Innovation for Growth.

The ideas ranged from the trivial, like the bank that had “the world’s first social credit card” – it was social because you can like it on Facebook – to the insanely ambitious, like the guys that are “going to replace the world’s banking system with tweets!”

I was disappointed that through the entire day, there was only one presentation looking at where the future of mobile money is going to come from – Africa.

That picture is from Jan Chipchase’s great presentation called Designing Services for Financial Inclusion, which you can download here.

Chipchase just put out a book called Hidden in Plain Sight, which recounts what he’s learned after many years of studying how people use technology around the world.  Much of his work has taken place in developing countries, and there are definitely technologies that are world-leading coming from those places.  Mobile money is one of them.  Here is what he says in the book:

However, when it comes to cutting-edge technologies that haven’t yet been implemented in the community or country you’re interested in, it helps to go elsewhere, to the early-adopter places. They aren’t always the most tech-savvy cultures, just the ones that took a particular step first. For next-generation display technologies, Seoul is the place to look. For mobile money services, Kenya provides the dominant model. Tokyo, as discussed at the top of this chapter, is good for looking at highly integrated services across ticketing, noncash payments, and location-based services. “Cutting-edge” can mean many different things when it comes to mobile phone use, and San Francisco, Tokyo, Afghanistan, Ghana, Kenya, and India are all worth a visit to understand their mobile ecosystems.

…

Today, Kenya’s M-Pesa is considered one of the most successful mobile banking services in the world. And Uganda Telecom has since launched their formal mobile wallet offering, M-Sente. The informal practices around airtime transfers and converting airtime to currency played an important role in this growth: building literacy around mobile use; generating trust in the process of transferring abstract things (airtime, money); making it easier to identify areas for improvement; and ultimately priming expectations as to what could be.

He goes on to explain one of the main reasons that mobile banking is taking off in Africa – in countries with little formal banking, cash is dangerous to carry:

The gap between developed and developing countries in terms of access to financial services is striking: about 49 percent of households around the world have deposit accounts, but that ranges from close to 100 percent in Japan to less than 1 percent in the Democratic Republic of the Congo and Afghanistan. Access is growing, but the numbers don’t always add up to significant gains. For instance, from 2008 to 2009, the nation of Burundi (population 8 million) doubled the total number of ATMs across the country—from 2 to 4 (using an ATM as a signifier of more formal banking services). In contrast, Canada, with the highest concentration of ATMs per capita, had about one for every 458 adults. But regardless of nationality, people are driven by the same basic motives when it comes to their money. The difference is that, in a place like Canada, if you ask someone why he puts his money into bank accounts, he might say, “Because that’s where it goes,” whereas if you ask a Burundian with no bank account why he sews his money into the lining of his coat, his response is paradoxically more likely to tell you about the essence of banking: he wants his money to be safe, until the very moment that he needs it.

That’s a much more compelling reason to store your money in a phone than we’re used to hearing.

I love that there are people in Silicon Valley trying to replace banks with tweets.  It might sound nuts, but so did being able to make a video call to anyone in the world with an internet connection for free.  When you’re in a place with lots of people with ambitious ideas, every once in a while one of them hits.  If we look at the scale of ambitions from “like the social credit card on Facebook” to “replace banks with tweets,” it’s great to have more people working at the ambitious end.

However, it’s also possible to get too caught up in the world you know.  That’s why I love Chipchase’s work – he’s out on the edge.  As John Hagel and John Seely Brown have told us, the edge is where innovation takes place:

Edges are powerful sources of business innovation because they are places of potential and friction, where traditional products and practices are no longer adequate to address unmet needs or unexploited potential. Much tinkering and experimentation occurs on the edge, as well as heated debate about the most promising options to address emerging needs, intensified by the diverse backgrounds, skill sets, and perspectives of participants gathering on the edge. By playing a part in this experimentation, companies participate in rich flows of new knowledge, flows that are the primary sources of innovation.

There are a few things that you can do to find the edge.  First, test your assumptions.  It’s an assumption that being on a social network makes your credit card “social” – an assumption that I think is false.

Second, as Nilofer tells us, travel, read and meet people.  She talks about these as ways to fuel personal growth, which is true.  But these are also ways to find the edge – they take you place you haven’t gone, and give you new ideas.  If you never get out of Silicon Valley, you can’t find the cutting edge of mobile money in Kenya.  If you’re reading widely, you can at least learn about it.

Finally, deliberately break your routine.  To innovate you have to make your own map, not follow a recipe.

The future of mobile money is happening right now in Africa.  Where is the future of your industry happening?

Note: If you want more from Chipchase, check out his book – it’s definitely worth the read. And you can also watch his TED talk from a few years back:

Related articles

• This Guy’s Job Is To Travel The World And Figure Out The Next Huge Tech Trend
• Kenyans Find the Unintended Consequences of Mobile Money
• The success of Kenya’s M-PESA – a short video
• Why does Kenya lead the world in mobile money?

The post Look for Innovation From the Edge appeared first on Innovation for Growth.

They made fun of Galileo, and he was right.
They make fun of me, therefore I am right.

This is obviously a logical fallacy.  Carl Sagan’s response to this idea was:

But the fact that some geniuses were laughed at does not imply that all who are laughed at are geniuses. They laughed at Columbus, they laughed at Fulton, they laughed at the Wright brothers. But they also laughed at Bozo the Clown.

It’s easiest to hold this view when your idea is just an idea – the best way to work around it is to try your idea out.  This is because the value of an idea is often only found once we try to use it.  There is often a huge lag between when we first see a new idea and when we really find out what it is good for – this is when we are working through business model innovation.  In his great book Pasteur’s Quadrant, Donald Stokes says this:

…the notable examples from the annals of technology, detailed by Rosenberg and others, in which it took many years for a new technology to find its most important commercial uses.  The steam engine was initially seen as a device for pumping water from mines and only later as a power plant for movable ships or carriages.  The railroad was initially seen as a feeder of good for canal transport and only later as a fully articulated system of transportation in its own right. The radio was initially seen as a “wireless” substitute for the electric telegraph for communicating between two ponits that could not be connected by wire, such as ship to shore, and only later as a means of “broadcasting” communication to a mass audience.  Indeed, this is is an almost universal phenomenon in the evolution of technology.  New technological paradigms seldom spring full-blown from the minds of their inventors, and when they do, as in the case of Arthur Clarke’s vision of communications satellites, the visionary is unlikely to be the person who makes the technological dream come true.

Stokes is arguing in the book for a reconceptualisation of research.  For quite a while now we have tended to view research as either basic – concerned with discovering new knowledge, but not with use – from applied – concerned only with use.  Stokes instead argues that a great deal of important research comes from work that considers both knowledge discovery and use – Pasteur’s Quadrant:

There are a couple of important points here.

First, it’s not enough to have a great idea – you have to actually try it out to find out if it’s any good.  That is how you avoid the Galileo Gambit.

Second, even if the idea works, we often don’t know what it’s actually good for.  To discover this, we have to put it into use.

Consequently, the best innovation comes when we are concerned with both discovery and use.

Put it all together, and it means that innovation requires a bias towards action.

(I grabbed the diagram of Pasteur’s Quadrant from Michael E. Smith’s nice post applying Stokes’ ideas to archaeology)

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In a previous post, I have pointed out the importance of diversity for innovation and organizational adaptability. Diversity is a crucial precursor to serendipity. In the Power of Pull, John Hagel, John Seely Brown and Lang Davison emphasize the rising need for serendipity:

We need to find ways to attract relevant innovators and edge participants so that we can discover early windows into the developments that will end up transforming how we live and work. Sure, serendipity has always been important, but in a world of near-constant disruption, it becomes essential to survival. Without the pleasant surprises of serendipity, we will instead have to cope with the unpleasant shock of unanticipated disruptions that undermine all that we have worked to achieve. (…)

We increasingly find that we no longer even know what to seek, even with the growing power of search. (…) At times like these, the cursor blinks in the search engine’s textbox, mocking us, asking the existential question: Do you even know what you are looking for? And even if we think we do, it’s guaranteed that “unknown unknowns,” as Donald Rumsfeld memorably called them, are waiting for us, both as opportunities and as barriers.

Innovation is becoming increasingly emergent

Innovation in the future will increasingly happen in more emergent ways by bringing together seemingly disparate fields and pieces of knowledge. The value of searching for information is increasingly limited as we don’t know what to search for in many cases. In face of complex life and work environments, predefined and narrow objectives as well as deliberate strategies often turn out to be inconvenient. Serendipitous “collisions”, in turn, require building up diverse networks and connections.

Google can answer almost anything you ask it, but it can’t tell you what you ought to be asking. – Ian Leslie

Though we increasingly interact within virtual networks and communities, physical spaces are the primary serendipity shapers. Face-to-face interactions are still most conducive to accessing tacit knowledge. We tap into this knowledge through trust-based relationships and closely working together on challenging projects.

Virtual and physical spaces can be seen complementary to each other. On the one hand, virtual spaces are increasingly able to amplify knowledge we generate through personal interactions.  On the other hand, diverse virtual connections often create more valuable real-life opportunities.

Figure: Simulated collision of two protons (credit: CERN, cern.ch)

In search of (engineered) serendipity

As firms, like Yahoo and Google see it, close-knit teams do well at tackling the challenges in front of them, but lack the connections to spot complementary ideas elsewhere in the company. The sociologist Ronald S. Burt calls these organizational gaps “structural holes.” In a 2004 study he found that managers who serendipitously bridged these holes were more likely to generate good ideas.

Firms therefore try to come up with new ideas to stimulate interaction between employees who normally do not work together. To make those connections happen, some firms are taking a scientific approach – collecting and analyzing data about their teams and mathematically computing the likelihood that employees will meet. Studies have found that having colleagues work in close proximity to each other does correlate with increased collaboration. Research recently found that when workers shared the same buildings and overlapped in their daily workplace walking patterns – moving between lab space, office space, and the nearest bathroom and elevator – they were significantly more likely to collaborate: for every 100 feet of “zonal overlap,” collaborations increased by up to 20%. Case in point: Online retailer Zappos.

Despite all efforts: it seems to be impossible to engineer the truly valuable interactions and collisions. However, the chances for serendipity can be boosted by arranging its necessary preconditions.

Shaping serendipity

Here is what Frans Johansson advises on how to leverage diversity of thoughts in order to increase the likelihood for serendipity to occur:

For instance, bring together people from outside your organization, or between siloed departments or between different countries or cultures. These interactions will help you find unexpected insights and opportunities — those that others might not have logically figured out. Take statistical advantage of these random moments by placing as many purposeful bets you can afford while not becoming distracted.

What else can we do to shape serendipity? Here are some further suggestions:

• If you just think of serendipity as an interaction with an unintended outcome, you can orchestrate pleasant surprises. Institute simple measures like positioning couches near doorways and stocking rooms with multiple types of seating to encourage lingering conversations.
• Think about companywide lunch hours. You can leverage chance conversations and larger social networks by providing tables, designed to accomodate a higher number of people.
• Abigail McBirnie mentions an interesting quantitative aspect of serendipity: in average, people make up one third of the participants of a serendipity story. The remaining parts are deemed to be either information or physical objects. This suggests to not just expose oneself to diverse people, but also to various information sources and novel physical environments for serendipity to occur.

Serendipity as ingredient for breakthrough innovation

Breakthrough innovation often relies on serendipity. Research from Wharton School suggests knowledge flows to be highly critical for breakthroughs. Knowledge flows involve knowledge that individuals are actively engaging in while doing a task. These flows allow information from peripheral domains to permeate. This can lead to recombination of ideas in novel and useful ways. The reason: information that is available in an individual’s short-term memory (knowledge flows) is more cognitively accessible than information stored in individual’s long-term memory (knowledge stocks).

The researchers also provide some managerial advice: allocate a large portion of a worker’s total work time to one particular assignment or project. If work group members have more attention available to devote to the task or project, the advantages of [paying]attention to a particular peripheral domain will be more likely to outweigh the disadvantages arising from distracting attention from other domains. Hoewever, there remains a risk that workers might focus too much on domains that are actually irrelevant to their task, thus preventing their performance on the primary task. This requires dealing successfully with such tradeoffs on the part of workers and managers.

Takeaway

Innovation and adaptability require deliberate, but also increasingly emergent approaches in order to succeed. Diversity and serendipity can be considered as necessary ingredients to stay competitive in the time to come. Serendipity can’t be literally engineered, but be shaped within given limitations. The likelihood for serendipitous encounters to occur can be increased by establishing appropriate preconditions, such as

• creation of serendipity-friendly virtual and physical infrastructures
• build-up of diverse networks, i.e. weak ties in complement to strong ties
• managers valuing serendipity and trust-based, encouraging leadership style
• ability of workers to adequately balance attention between core and peripheral domains, i.e. abosorbing edge information without being distracted from core tasks
• capability to integrate convergent and divergent thinking, or as Jorge Barba puts it: if you’re told what to look for, you can’t see anything else.

The post Innovation and Serendipity appeared first on Innovation for Growth.

Our life expectancy has increased dramatically over the past hundred years.  I’ve talked a few times about how this is a pure innovation story.  Here’s another innovation story about life expectancies, but it’s less encouraging:

The drawing is by Jay Cross from the Internet Time Alliance, based on data from Richard Foster and Sarah Kaplan’s book Creative Destruction and work from the Deloitte Center for the Edge.  It shows that while average US lifespan has increased by sixteen years from 1937 to 2012, over the same period of time, the average time that firms remain in the S&P 500 has fallen from 75 years to 15.

That boggles my mind.

This is one of the pieces that Rita Gunther McGrath uses to argue that competitive advantage is dead in her new book, The End of Competitive Advantage.  If your firm had a competitive advantage in 1937, you could expect it to be around for a long time – probably longer than you’d last yourself.  That’s not true now.

Now You Have to Innovate

McGrath argues this competitive advantages are still important, but that now they are transient rather than sustainable.  And in that environment, we need to innovate.  She uses Sagentia as one of the case studies in the book (which is well worth reading), and says this:

At Sagentia, innovation is clearly at the top of the agenda, throughout its operations. As one senior executive noted, “Inherently, companies like ours are super agile, because we are not in control of our own destiny … We can only live off something that our clients have decided to do.” This makes Sagentia a model for where more and more businesses are headed—as competitive advantages shorten and competition comes from everywhere, increasingly firms are in the same position, that is, “not in control of [their] own destiny.” Consistent, ongoing innovation and extraordinary closeness to customers is the only possible response.

This raises a pretty interesting point – as competitive advantages weaken, we have less control over our own destiny.  In other words, we need to get more comfortable with uncertainty.

How long will it take to build your consistent innovation capability?  McGrath says two to three years.  That’s why you need to be working on it now, if you aren’t already.

Steps You Can Take Right Now

In addition to building your organisation’s innovation capability, you also need to build your own skills in this area.  Here are some steps that you can take right now to start:

1. Think about how much you can get away with – if you manage a budget, how much discretion to you have? If you don’t have a budget, what are the parts of your job that you control?
2. Make a list of 10 things that you can do within the current scope of your work that will make things better for the people with whom you interact – customers, co-workers, bosses, whoever.
3. Do those things.
4. Figure out which ones worked, and do those more.
5. Figure out which ones didn’t work, learn why not, then forget about them.
6. Apply what you learned to the next set of ideas.
7. Go back to step one.

I’ve always been skeptical of “everything is different now” type arguments.  But there’s a fair bit of evidence accumulating that the pace of business is changing.  The boundaries of your industry probably are, and your competitors probably are too.

To meet these changes, you have to change yourself.  That means you have to able to innovate.  It’s a core skill these days.

Related articles

• Competitive Advantage Is Dead. Here’s What To Do About It.
• Here is Why You Need Business Model Innovation
• Sagentia’s Technology Experts Discuss How to Bring Breakthrough Innovations to Market

The post Here’s Why You Need to Build Your Innovation Capability appeared first on Innovation for Growth.

I was talking with entrepreneurial brothers Paul and Ian Everest last week about how Unit, the company they started together 10 years ago, uses social media.  Ian said: “We hate Twitter… but we get a lot of love on Instagram.”

They thought that the amount of love on Instagram was a bit weird, because while they have more than 250,000 likes on their Facebook page, they only have 16,000 people following their Instagram account.  On twitter they have 5000 followers.

The paradox is this – when they post on Instragram, they are averaging around 700 likes per post – which is equal to about 5% of the people following them.  On Facebook, they’re getting around 300 likes per post – about 0.1% of the people they’re connected with.

What makes they difference?

Here’s a photo of theirs that has nearly 1200 likes on Instagram, and it tells a big part of the story:

They get a lot of love on Instragram because they are a highly visual brand.  Their slogan is “The Art of Progress” – while they are making clothes for FMX and BMX riders and fans, they primarily view themselves as a creative and artistic brand.

That’s why Instagram loves them.

Choose Outposts That Fit Your Strengths

Ralph-Christian Ohr and I are just putting the finishing touches on a book chapter that we are writing together on how to use social media to support innovation.  One of our key messages in it is that you need to match the social tools that you use to your skills and objectives.  There is no one-size-fits-all solution to social.

It’s not the case that everyone needs to be on Twitter, or on Facebook, or blogging, or anywhere else.  What you choose depends on what you do.

The Unit guys illustrate this perfectly.  Of course they hate Twitter – they’re not a verbal brand.  They make art.  So Instagram is the way to go.

Valeria Maltoni does a great job of laying out a sensible social media strategy – check out her description of how she participates in social networks.  She has her home base – her website.  She also uses Google+ to reflect on and discuss important stories in her area, and Twitter to share resources.

This base + outposts has also been discussed by Chris Brogan -  who says:

Thinking of your primary online presence as your home base (and it doesn’thave to be a blog, but Twitter isn’t necessarily the right medium, I don’t think), and then thinking of the places where you make social connections as your outposts (realized I forgot LinkedIn, but I’m there too, obviously), then you see how you might prioritize your time and/or how you might try keeping the value chain alive.

You pick your outposts based on your strengths.  One of Valeria’s strengths is conversation (her site is called Conversation Agent after all!), so it makes a lot of sense to use Google+ as the main outpost.  In the same way, Unit’s strength is in the visuals – so Instagram makes sense as the primary outpost.

Three Steps for Social Media Success

There are three steps for social success:

1. Do awesome work.  There’s no point in doing any social media if you’re not doing awesome work in the first place.  You have to have solid content and ideas to share.  Put your energy here first, then figure out the best way to share it.  Valeria and Unit both do awesome work – and that is the foundation for their success with social media.
2. Connect with people. Here’s how Hugh MacLeod puts it:
   

   …all the internet is, as Doc Searls said, is a bunch of protocols that “allow us to get along.” Protocols allow us to talk to each other. The stuff in the middle, the stuff that separates us, the stuff that directly makes use of these protocols – hosting companies, web sites, blogging platforms, microblogging platforms, etc. – matter far less.

   You’re on one end of the wire. Just think about who’s on the other end of the wire, and what you can do for them. Worry less about the wire. Worry less about the shiny objects in the middle.

   Just worry about MAKING your own stuff, and the rest of the internet will look after itself.

3. Choose outposts that fit your strengths.  Valeria and Unit make great stuff in very different ways.  So they need different outposts.  If you try to use every social media tool available, you’ll spread yourself so thinly that you won’t be able to use any of them well.  Pick the best ones for you – and focus on them.

There are many different ways to use social media.  It’s also important to remember that social media is only one small part of the social era, which, as Nilofer Merchant says is about how:

Connected individuals can now do what once only large centralized organizations could do, which changes organizational  structures and individual power.

So doing the social era right is another topic entirely.  But start with social media, the path is: do awesome work, connect with people, and choose outposts that fit your strengths.

The post Three Steps for Social Media Success appeared first on Innovation for Growth.

One of the big privileges in my job is that I get to travel a fair bit. As part of this, I’ve been coming to Palo Alto about once a year for the past five years.  This is interesting because that is infrequent enough that the changes that look gradual to those that live here look like jumps to me when I’m here so irregularly.

The big jump I’ve noticed on this current trip is that electric cars are finally taking off.

On previous trips, I saw lots of Tesla cars – all in showrooms.  This trip, they’re on the road:

And it’s not just Teslas.  The place I usually stay has had reserved parking spaces for electric cars since 2009.  Previously, I haven’t seen any cars in them.  On this trip, they’re taken, and they’re using the charging stations:

Observing the Lead Users

Jean-Louis Gassée wrote a really interesting post on Tesla this week.  In it, he talks about how Palo Alto has always been a leading indicator of where green vehicles are heading:

Walking Palo Alto’s leafy streets in the early 2000s, I witnessed the rise of the Prius. Rather than grafting “green” organs onto a Camry or a disinterred Tercel, Toyota’s engineers had designed a hybrid from the tires up…and they gave the car a distinctive, sui generis look. It was a stroke of genius, and it tickled us green. What better way to flaunt our concern for the environment while showing off our discerning tech taste than to be spotted behind the wheel of a Prius? (I write “us” without irony: I owned a Gen I and a Gen II Prius, and drive a Prius V in France.) Palo Alto was Prius City years before the rest of the world caught on. (Prius is now the third best-selling car worldwide; more than a million were sold in 2012.)

The Prius case is interesting, because when they first came out, the response was very similar to what we’re hearing about Tesla now.  The car was too expensive, it was elitist, it would only sell to radical greenies, and so on.  And now it’s the third best-selling car in the world. 

I don’t know if Tesla will ever get to that point, but it is definitely moving electric cars along the innovation diffusion curve.

Innovation Diffusion Lessons from Tesla

This diagram shows how innovation diffusion usually works.  New ideas spread along an S-Curve – the solid line in the diagram – or if they fail they follow the curve marked B.  But when there’s a lot of hype around an idea, we expect it to follow the curve marked A.  Incumbents that think they have a lot of time to respond expect the new idea to follow the curve marked C.

But new ideas that succeed don’t follow any of these curves – the follow the S Curve.

We can see why by looking at Tesla and the other electric cars that are just starting to take off.  Here are some of the lessons:

• New ideas spread much more slowly than we expect.  The first electric car was made back in the 19th century, before there was a dominant design for cars.  GM introduced the EV1 in 1996 – seventeen years ago.  That made everyone expect electric vehicles to take off – it’s where the hype really started.  But new ideas spread slowly – the time value for X is always longer than we expect it to be.
• Disruptions start in niches.  When the Prius came out, it was relatively expensive.  Gassée’s recounting is pretty accurate – it first took hold with people that were willing to pay a bit more to show off their greenness.  But it eventually spread from that niche.  He thinks that Tesla will do the same:
  

  The numbers point to a future where Tesla can leave its niche and become a leading manufacturer in a too-often stodgy automotive industry. And, of course, we Silicon Valley geeks take great pleasure in a car that updates it software over the air, like a smartphone; that has a 17″ touchscreen; and that’s designed and built right here (the Tesla factory is across the Bay in the NUMMI plant that was previously occupied by Toyota and GM).

• It takes time to work out the business model.  One of the reasons that the value for X is longer than we expect is that it takes time to learn how to make the new idea work.  A big part of this is building a good business model around it.  Farhad Manjoo compares Tesla to Apple, and he explains how their business model is evolving:
  

  But even though its prices were competitive, Apple was able to keep its profits high, thanks to amazing manufacturing efficiencies.

  Now Tesla seems to be following the same path. At $70,000 the Model S, its family sedan, is still a very expensive car, but it’s far cheaper than the $109,000 Roadster that Tesla launched in 2009. This week, the company announced that in the first quarter of 2013, it earned its first-ever corporate profit. It sold 5,000 cars in Q1, and its list of orders is growing by 20,000 per year. Part of the reason Tesla has turned profitable, Musk explained in a shareholder letter, is by making its production processes more efficient. Among other things, the company reduced the amount of time it takes to build a car by 40 percent. Over the long run, Musk aims to keep lowering the price of its cars—he’s hoping to release a $30,000 car in the next three or four years—while keeping the company’s gross profit margin at 25 percent, which is very high for the car industry.

• Slow diffusion makes it easy to mock new ideas. All of this comes together to show how it is pretty easy to mock a new idea – the first stage of responding to a disruptive innovation, followed by aggression, bargaining and getting smashed like a but.

Steven Johnson made the Apple-Tesla comparison first, and this quote from him pulls all of these issues together:

The question is whether Tesla is the Apple of 1985 or the Apple of 2005.

Tesla critics tend to see it as the former: a luxury car maker for people who have the spare change to experiment with ultimately impractical electric cars. The Roadster and the Model S, in this scenario, are the automotive equivalent of the original Macintosh: an expensive experiment that will never capture a mass audience. The believers see Tesla as closer to Apple right before the launch of the iPhone: a company about to help propel (and profit from) a massive sea change in consumer behavior.

In large part, those two alternatives ultimately come down to a single, crucial question: how close are we to the obsolescence point for combustion engines? Most scenarios assume that we are not very near indeed. Warren Buffett apparently thinks all cars on the road will be electric by 2030, but most analysts assume it will take us that long just to get to 50% EV penetration. But what if Buffet is correct, and the EV tipping point is right in front of us? What if Buffet is underestimating the rate of change?

I think Buffett is right.  It looks to me like we’re starting to hit the tipping point.  The analysts are assuming that electric vehicles are going to follow curve C.  But students of innovation know that they will follow the S-Curve.

Time to get ready for your electric car.  And I guess we can start planning for flying cars next - maybe that’s how I’ll do my traveling in the future!

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The post Innovation Lessons from the Rise of Tesla Motors appeared first on Innovation for Growth.

Valeria Maltoni

I’ve admired Valeria’s work on her blog Conversation Agent for a number of years now. Today, I was fortunate enough to meet her in person.  Our discussion was wide-ranging, and we touched on a number of interesting ideas.

Valeria one of the best thinkers around on the topic of how firms actually work.  She is starting to place more focus on the importance of executing ideas, which is an area that is often an innovation problem.

As you would expect from the name Conversation Agent, she thinks a lot about how discussion drives business, and idea that I also looked at in  talk is the technology of leadership.  In doing this, she is putting an increasing focus on listening to form genuine connections with people.  In a post on the importance of making real-life connections, she says:

Do you have enough diversity and autonomy in your life? How well do you listen to others? Are you open to multiple cultures outside your own?

All good reasons to stop seeking (fake) links, and start making connections.

Valeria is a strategist, and an outstanding one at that.  If you’re not familiar with her work, you should check it out. Here is one of her short talks:

Terri Griffith

In one of my exec ed courses earlier this year, one idea really seemed to stick with the people in the class.  It came from Terri Griffith and her excellent book The Plugged-In Manager.  In the class we were discussing how to make their firm more innovative.  They asked what tools they should be using.  In response, I outlined Terri’s argument that it is insufficient to think only about tools – you must instead consider technology, people and proceses, and how these three systems interact.

This is how she describes the objectives of the book:

Too often discussions of management practice focus exclusively on managing people and organizational issues. Rarely, however, do they incorporate a discussion about technology or address all three dimensions in a balanced way. When they do, the result is game changing. In our hypercompetitive environment, those managers who are outstanding at being plugged into their people, technology, and organizational processes simultaneously excel at coming up with effective business solutions.

The Plugged-In Manager makes the case that being plugged-in—the ability to see choices across each of an organization’s dimensions of people, technology, and organizational processes and then to mix them together into new and powerful organizational strategies, structures, and practices—may be the most important capability a manager can develop to succeed in the 21st century.

I think that this is absolutely correct – and my class did too.  This framework showed up in a couple of their final reports.

Terri is at the leading edge of management thinking and research, and I love her work.

Henry Mintzberg

Another person at this leading edge is Henry Mintzberg.  I’ve been reading a lot of his work recently.  He is one of the leading proponents of the idea that the most important form of strategy for organisations is emergent strategy – the routines and approaches that occur as we respond to our changing environments.

Mintzberg’s description of management is the one that really rings true with my experience as both a manager and one who studies them.  This is from his book Managing:

Most of the work that can be programmed in an organization need not concern its managers directly; specialists can do it. That leaves the managers with much of the messy stuff—the intractable problems, the complicated connections. This is what makes the practice of managing so fundamentally “soft,” and why labels such as experience, intuition, judgment, and wisdom are so commonly needed to describe it. Put together a good deal of craft with the right touch of art alongside some use of science, and you end up with a job that is above all a practice. There is no “one best way” to manage; it depends on the situation.

…

I don’t want you to leave this book knowing. I want you to leave it, as I do, imagining, reflecting, questioning. Managers are only as good as their ability to work things out thoughtfully in their own way. To repeat, this is a job of paradoxes, dilemmas, and mysteries that cannot be resolved. The only guaranteed result of any formula for managing is failure (including, of course, this one).

When you think of managing in this way, the Valeria’s point about the importance of conversation becomes more critical.  So does Terri’s discussion of the interactions between technologies, people and processes.

Mintzberg’s work is well worth checking out.

Rosalind Franklin

This is the scan that led researchers to the discovery of the structure of DNA:

Since everyone knows that Watson and Crick discovered DNA, then this scan must be theirs, right?  Wrong.

This scan was done by Rosalind Franklin.  I was reminded of her story while reading Nonsense on Stilts by Massimo Pigliucci, where he credits the discovery of DNA’s structure to “Watson, Crick and Franklin.”  This attribution is rarely made, but it’s actually correct.

Franklin was a brilliant scientist (see this biography for more information) until her career was cut unnaturally short by cancer.  Her DNA research was creative, while her approach to science was determined.  We could use more like her.

Rita Gunther McGrath

The lifespan of the average competitive advantage continues to shrink.  This means that traditional approaches to strategy are becoming decreasingly useful.  This is an issue where Rita McGrath is doing important work.

She has already demonstrated the importance of making staged investments in innovation, rather than big bets.  Here is how she frames it:

 In highly uncertain environments, it’s nearly impossible to predict with any accuracy which innovations are likely to succeed and which are not. It makes sense, therefore, to test out a number of different approaches on a small scale, proceeding forward only when you’ve validated enough assumptions to move ahead with confidence. The logic of real options supports this approach: essentially encouraging companies to take out a couple of different projects aimed at a promising market or technology, without huge risks. “Big bet” ventures in our experience seldom work out.

As Paul Hobcraft pointed out to me recently, she is expanding on this issue in her forthcoming book The End of Competitive Advantage.  Here is how she introduces the key ideas in the book:

Strategy is stuck.  If you dropped into a boardroom discussion or an executive team meeting, chances are you’d hear a lot of strategic thinking based on ideas and frameworks designed in, and for, a different era.  the biggies – such as Michael Porter’s five forces analysis, BCG’s growth-share matrix for analyzing corporate portfolios, and Hamel and Prahalad’s core competence of the firm – are all tremendously important ideas.  Many strategies today are still informed by them.  But virtually all strategy frameworks and tools in use today are based on a single dominant idea: that the purpose of strategy is to achieve a sustainable competitive advantage.  This idea is strategy’s most fundamental concept.  It’s every company’s holy grail.  And it’s no longer relevant for more and more companies.

In this book, I take on the idea of sustainable competitive advantage and argue that executives need to stop basing their strategies on it.  In its place, I offer a perspective on strategy that is based on the idea of transient competitive advantage: that to win in volatile and uncertain environments, executives need to learn how to exploit short-lived opportunities with speed and decisiveness.  I argue that the deeply ingrained structures and systems that executives rely on to extract maximum value from a competitive advantage are liabilities – outdated and even dangerous – in a fastmoving competitive environment.

This is important work.  I’m looking forward to the book.

These are five thinkers that have influenced me recently.  Who is influencing you?

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The post Five More Thinkers That I Admire appeared first on Innovation for Growth.

Drake Baer wrote a terrific profile of a startup called Thumbtack discussing how their decision to hire a full-time chef has transformed their business.  Cofounder Sander Daniels lists the reasons they made this decision:

• Meals build community: Everyone on the team eats together every day
• Meals build networks: On Wednesdays they have an open dinner where recruits can hang with the company
• The team is more productive: People aren’t leaving the office to wait in lines or scrounging around for food
• Everyone is eating awesome food, so everyone is healthy

And they say this in their Food Rules for Startups manifesto:

Often startups try to attract talented teammates by offering benefits like ping-pong tables, video games, or gym memberships. While those things are valuable, a culture of good food is an order of magnitude more important. Sharing meals around quality food builds an environment that encourages collaboration and celebrates excellence. The team is excited to come to work because they value and respect the full work environment. We believe every company can benefit from a food-centric culture.

Baer outlines why this is a broadly good idea, but I want to talk about why this is a great innovation idea.

If you do something like this, you are actually changing your business model.   I’ll use the Business Model Canvas version of the business model to illustrate the discussion:

When you start cooking people lunch (and changing all the other food-related processes in your workplace) you are changing a key activity.  The first consequence that a lot of people will think of is that you are adding cost.  This is true, you are a cost.  But if your people are healthier, you are also reducing the costs that accrue from poor health.  And your productivity goes up, etc.

More importantly, this will attract a different, probably better, pool of people that want to work for you.  So your key resources change.

Idea generation will improve as people problem-solve together at meals – so another key activity changes.  Your key partnerships will change as more people learn about and interact through the company at the open dinners.  This may in fact lead to new channels to customers.

As all of these back-end activities change, you will be coming up with great new ideas that can lead to new value propositions, different customers, and so on.  One change to one activity has a domino effect throughout your entire business model.  After that happens, you are running a firm that is substantially different from all the other ones in your market.

Here are some of the important lessons in this:

• You can innovate anything.  Not everyone can afford to invest millions in R&D.  Not everyone can start entirely new product categories from nothing.  But everyone can think about their business model and find ways to change it.  Find the things that everyone else takes for granted – like “we get our own lunch” – and change it.  It can transform the way you do business.
• Face to face is still critically important.  Here is what Valeria Maltoni says:
  

  Emails, phone calls, or in person meetings are the best conversion tools for individual connections. In a post that has helped me research the question of influence more thoughtfully over the years, Stephen Downes said that rather than being a question of linkage, influence originates from [diversity, autonomy, openness and connectivity.]

• Yes this probably will work for you. When I talk to people about ideas like this, they will often say something like “That’s fine for a startup, but that would never work here in the real world.”  Why not?  If you’re running a big company, isn’t it important to have healthy and productive people?  Every single CEO that has ever said “our people are our most important asset” should be doing something like this.  If they’re not, then maybe it’s their real estate that is their most important asset, or their fleet of vehicles, or….. something. But if your firm is built on people, you need to take care of people.

The idea that changing one activity can change your entire business model is powerful.  It takes time to reorganize the other components of the business model to adjust to this, and that can be hard.  But it can also be an important source of competitive advantage, because innovative business models are harder to copy than innovative products.

Give it some thought – what are the activities that everyone in your firm or industry take for granted?  If you can innovate lunch, you can innovate anything.

[Photo of Thumbtack chef Thea Baumann by Anastasia Tumanova]

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The post Food, Connection & Innovation appeared first on Innovation for Growth.