innovationmanagement

Here’s an alarming stat from Charles Baden-Fuller: 2/3 of companies have not articulated their business model.

Yikes!

This video has an interview with him in which he discusses this statistic and some of other business models issues that arise from the articles in a special issue of Long Range Planning which has twenty articles on the topic (all free to download through September):

(Thanks to Anders Sundelin for the pointer to the interview)

There are many different Business Model models in use at the moment – but all of them include similar components such as target market, value proposition, revenue generation mechanism, and position within the value chain and value network. The critical point here is that whatever business your organisation is in, it has these components. In other words, you have a business model whether you’ve consciously thought of it or not.

And according to Baden-Powell’s research, at least 2/3 of us haven’t thought of it.

This is a problem for two reasons. The first is that we need to understand what our business model actually is in order to ensure that all of it fits together. The business model is an excellent tool for evaluating strategic fit. If our target market is “people that want to buy the cheapest shoes possible”, every other activity we undertake has to be oriented around driving costs down. You can use business model analysis to ensure that all your other activities are aligned with this strategy.

The second reason that we need to know what our business model is is that if we don’t articulate our business model, we can’t innovate it. Business model innovation is a powerful form of innovation. The same innovation performs differently within different business models. Consequently, business model innovation is an important tool that we need to understand.

One last point – anyone can innovate a business model. Not every organisation has the resources needed to invest heavily in R&D, or other resource-intensive forms of innovation. However, with a bit of creative thought, you can develop a new business model.

Business model innovation is currently underutilised. In part this is because many organisations have not articulated what their business model actually is. Doing so is the first step to figuring out a genuinely novel way to create value for the people for whom you’re creating things.

This “Corporate Entrepreneurship and Open Innovation” course is directed toward Corporate and Start-up entrepreneurs interacting in an Open Innovation setting, responsible for building new businesses based on breakthrough technologies. It is also designed for managers responsible for new business model implementation in an Open Innovation context targeting long-term corporate growth, including: Corporate R&D; New Business [...]

EPIC is a unique face-to-face opportunity for discovering high-value projects & ventures. Holistic by design, this program delivers cross-functional & cross industry representation where the common denominator lies in innovation, specifically commercialization. It creates & facilitates an open market for win-win partnerships. EPIC challenges the “typical players” to develop innovative business models for bringing underutilized [...]

by Jeffrey Phillips

One of the interesting challenges about innovation is its connection to cost and to value. All innovation efforts promise value tomorrow, in the form of great new products and services, at the cost of investment today. Since the return isn’t usually a certainty, the executives who sponsor innovation seek uncertain but larger returns in the future based on specific investments today. The uncertainty around innovation causes many opportunities to be missed. Wouldn’t it be great if ideas were “on sale” or even free? Then, there would be less resistance to innovation, right?

Not in a million years. The “cost” of innovation has very little to do with the development of ideas. As a person who is actively involved in a number of innovation projects, I can tell you that there are always more ideas than can possibly be considered, and often many of them represent good opportunities. The generation of ideas is not time consuming and isn’t expensive. In fact, I’ve argued before, ideas are a commodity and are often simply adaptations of concepts from history or from other industries. In fact, ideas are on sale all the time in an organization that encourages innovation – ideas for the most part are free and readily available.

The challenge isn’t in the cost of generating ideas, it’s in two factors – overcoming resistance to new ideas and in the difficulty of developing a new idea into a new product or service. These are the two interesting issues to address, and can tell us a lot about an organization and its priorities. Let’s look at both in turn.

A good friend (Hey Todder!) and innovator has a statement on his wall to the effect that if you have a good ideas you shouldn’t worry that other people will steal it. If it’s a really novel idea, you’ll typically need to cram it down their throat to get them to accept it. That’s because while we pine away for really interesting new products and services (bring me the next iPod of our business!) we are awfully wedded to the existing products and services in our business. After all, the processes and teams are optimized to build and provide those existing products and services, and they make some nominal return. Changing that status quo seems dangerous and difficult, and we usually only make the change when actual threats or disruptions appear. If you want less expensive innovation, find ways to reduce the cost of resistance to new ideas, either by invalidating a way of doing business internally or simply creating a skunkworks that is entirely removed from the business. These costs are primarily psychic costs, but often are the most expensive costs and the biggest barriers.

The second issue is an even bigger conundrum. In what should be a “best practice” – product development and management – many firms simply don’t have the capability or bandwidth to create new products and services. Although by definition they must have created products and services previously – otherwise they wouldn’t have any offerings – they seem incapable of creating a new product or service. It’s as if hundreds of years of product development philosophy and training doesn’t exist. The fallacy here is that long product life cycles mean that we can build new products only very occasionally. Perhaps a new Moore’s law is in order. With a humble heart we’ll call it the Phillips’ law of diminishing lifecycles. With global competition, we’ll argue that average product lifecycles are halving every four years. What may have been a seven to ten year lifecycle in 2000 is now at best a two to three year lifecycle. As lifecycles decrease, the ability to gin up new products consistently and capably is not just a competitive differentiator, it’s the difference between success and failure.

If you want less expensive innovation, reduce the psychic costs of change by creating space and the expectation of new ideas and new products, and reduce the actual cost of product development by implementing new product development techniques and hiring the right people. The bottleneck from an innovation perspective is not in the generation of ideas, but in the development of ideas. We can “mark down” the costs of innovation by decreasing the costs of idea development.

PS: I left this post and felt I had to return to it to add this postscript. Think about this in a completely different way. Suppose someone came to you and offered you, at no price, several really great ideas for new products or services. The ideas have been developed based on customer insights and generated by a top notch team. All that is needed is for your team to adopt them, test them and implement them. The great ideas in a sense are “free”. Could your team accept the ideas and bring them to market quickly? If not, what are the barriers that get in the way? Are those barriers tangible barriers like a lack of people or resources, or are those barriers cultural or psychological barriers like resistance to change or fear of new ideas? Regardless of the barrier, you’d better find a way to eliminate the barrier and improve your ability to convert new ideas to new products.

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Jeffrey Phillips is a senior leader at OVO Innovation. OVO works with large distributed organizations to build innovation teams, processes and capabilities. Jeffrey is the author of “Make us more Innovative”, and innovateonpurpose.blogspot.com.

A Micro-Experiment

by Thomas Thurston

Framework in Question: Pursuing “adjacent” markets increases the likelihood of new business success.

Framework Background: The bestseller Profit from the Core; Growth Strategy in an Era of Turbulence (Allen & Zook) asserts that, in order to grow, corporations should (1) define their “core business,” and then (2) limit new growth businesses to those that are “adjacent” to that core business. More specifically, adjacency expansion is defined as a firm’s migration into related businesses that utilize and, usually, reinforce the strength of the profitable core. The book cautions against attempting to start new businesses that are too far removed from a core business. Stick close to your knitting.

Entrepreneurs are less likely to succeed in businesses they know nothing about. This is not in dispute. It makes sense to start new businesses that have something to do with one’s general expertise. However it is quite another thing to assert that adjacencies are in any way predictive of greater success. In other words, can we predict that adjacencies will be more likely to survive than non-adjacencies? It it a meaningful distinction?

To begin answering this question, adjacencies must first be defined. Profit from the Core classifies the most common “adjacencies” as:

• Interlocking customer and product adjacencies (find new customers for your existing offerings, and then adapt your offering to those new customers. Said to be the most common adjacency.)
• Share-of-wallet adjacencies (selling highly related offerings to customers you know intimately. ex. American Express expanding from credit cards to credit insurance, travel insurance, life insurance. Said to have the highest success rate of adjacencies.)
• Capability adjacencies (use known expertise or resources to start other related businesses. Ex. Motorola using its understanding of ‘walkie-talkie’ wireless electronics to expand into pagers, home radios and cell phones.)
• Network adjacencies (where networks are at play, expand your network of offerings and customers. Ex. Vodafone’s acquisition of AirTouch.)
• New-to-the-world adjacencies[1] (Take advantage of new, uninhabited opportunities that arise as industries change and future markets develop.)

Examples of non-adjacent growth efforts are provided, such as Motorola’s expansion from wireless electronics into eight track tape players and push button gasoline car heaters (both of which failed).

Our Analysis: To test the predictive relevance of adjacencies a sample was created consisting of more than 50 new business efforts (BUs) funded within a single multi-billion dollar parent company (Parent) throughout a 13-year period. All BUs were organized within the Parent, not as joint-ventures or subsidiaries. Each BU was classified as “core,” “adjacency” or “non-adjacency” using best efforts to follow the guidelines set forth by Profit from the Core.

Our classification scheme was as follows:

Core = an existing mainstream businesses of the Parent company. For example, Motorola launching a new cell phone in 2010 would be considered a “core” innovation.

Adjacency = a new offering related to the core business. For example, when Motorola (initially a maker of wireless ‘walkie-talkies’) first entered the cell phone and pager businesses.

Non-Adjacency = a new offering that was not related to the core businesses. For example, when Motorola attempted to commercialize eight track tape players and push button gasoline car heaters.

After classifying each BU, the data set was probed for statistical correlation between the given categorization scheme and the ultimate survival or failure of each BU.

Conclusion 1: Highly subjective. The classification scheme set forth by Profit from the Core was highly subjective. The distinctions were extremely porous. Guidelines were vague, ambiguous and highly susceptible to Socratic interpretation.

With enough argument and creativity, a wide range of new businesses can be contradictorily classified as either core, adjacencies or non-adjacencies. In-depth discussions between multiple individuals seldom achieved consensus regarding what was “core,” “adjacent” or “non-adjacent.” Confounding the issue, support for each conflicting view could almost always be found within the text itself.

For example, Profit from the Core itself lists Motorola’s attempt to sell eight track tape players as a non-adjacency. However, around the time of its eight track effort, Motorola’s founder Paul Galvin defined his firm as an “electronics company.” Don’t eight track players fall under the umbrella of “electronics”? Why weren’t they “adjacent”?

Meanwhile Motorola’s entrance into orbiting satellites is listed as an adjacency, stating that Motorola’s core was not truly “electronics,” but “wireless electronics.” In hindsight, this addition of a “wireless” precondition to Motorola’s core would explain the book’s inclusion of satellites as adjacent, precluding eight track players. However “adjacencies” are of little practical value if hindsight is required to define them.

The examples surrounding Motorola also reach contradictory real-world outcomes. Motorola’s “adjacent” satellite businesses went bankrupt, while non-adjacent businesses (i.e. ‘non-wireless’) grew steadily for extended periods of time (ex. Motorola’s home set-top-box business). Even hindsight can provide poor guidance for defining a firm’s core or adjacencies in this model.

Conclusion 2: Not predictive. There was no statistically significant correlation between the core/adjacency/non-adjacency BUs in our sample and their likelihood of survival or failure. It was not predictive.

However the experiment exhibited stark contrast between “core” and all other efforts. While only representing around 15% of the total sample, “core” businesses survived more often than they failed (over 60% survival rate). However both adjacencies and non-adjacencies failed more than 90% of the time.

Summary:

It makes sense to know something about the business you are in. No argument there. However our results suggest that dividing the world into core/adjacency/non-adjacency categories for innovation does not make one more or less likely to succeed. A far more probative (albeit still incomplete) categorization scheme seems to be simply “core” and “non-core.” The notion of adjacencies was loosely defined and too readily misleading.

This is not to assert that firms should only fund “core” businesses. Nor does it imply that businesses should go to another extreme of funding any random new idea they come across. Rather, reliable decision tools begin with observed data, upon which categorization schemes are built to make sense of what is being observed, followed by empirical processes to test validity. How we look at the world determines what we see. In the case of Profit from the Core, the “adjacency” categorization scheme was highly subjective in practice, and failed to prove empirically meaningful. Another way of explaining the world is needed. Back to the drawing board.

“Adjacencies” were not significantly predictive of business survival or failure. While offering several quality, generic business considerations, Zook & Allen’s model failed to produce empirically relevant answers. Evaluating businesses by virtue of their proximity to a core may seem intuitively logical, however the empirical value amounted to little more than myth.

Sources:

1. Allen & Zook, Profit from the Core; Growth Strategy in an Era of Turbulence, Harvard Business School Press (2001)

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Thomas Thurston is a global thought leader in specialized bodies of corporate strategy and investment methodology including predictive analytics and revenue based investing. He works with venture capital, capital market and angel investors, in addition to businesses of all sizes.

by Mike Myatt

Over the years I’ve come to believe that there is only one sure fire litmus test for measuring leadership success, and to the chagrin of many reading this post, it has little to do with what happens on the job. Today’s post might push a few buttons and test the boundaries of your comfort zone, but if you stick with me, I promise you’ll be glad you did. I’m going to peel back the layers on your personal brand, question your priorities, and quite possibly put a big dent in your carefully crafted professional facade. We’re going to get very personal today – How’s your family life?

If the opening paragraph caused you to wince, then the text that follows is written just for you. If the next sentence seems a little preachy, it’s meant to be. The true test of any leader is not measured by what’s accomplished in their professional life, but rather by what’s accomplished at home. If you’re a well oiled machine at work, but your family is falling apart at the seams – who cares? Let me be blunt – you won’t earn anyone’s respect, at least not the respect of anyone who matters, if your concern for career success overshadows your concern for the well-being of your family.

My advice is simple:

Create a legacy that transcends your career. Having the advantage of the hindsight my gray hair affords me, I can say with great certainty that who you are as a person is infinitely more important than the title you hold at work. There are few things in life as thought provoking as witnessing what by all outward appearances seems to be a successful executive, but as you begin to peel back the layers of their carefully crafted veneer, you quickly come to realize that they are little more than an empty, bitter, and frustrated person. They work their entire career chasing some illusive form of fulfillment only to fade into the sunset with nothing more than an empty lifetime of regrets as their reward.

I’ve simply lived too long to buy into the myth that success in the workplace will create happiness at home. While it makes for a nice sound bite to console those with a guilty conscience, IT IS A LIE. If your business is growing, but your spouse is crying and your children are neglected, it’s time to do a reality check on your priorities. If your secretary respects you, but your spouse doesn’t you have serious issues that need your immediate attention. If you would rather spend time with your online “friends” than with your children, it’s time to pull the ripcord on your internet connection.

Here’s the cold hard truth…if you cheat your family to invest into your career, you and your loved ones will pay a very heavy price. It is simply wrong to value your workplace commitments over your family commitments – moreover it’s not necessary. If your focus is on your family, your career won’t suffer, it will flourish. Get this wrong and not only will your family suffer, but so will you as you someday mourn the loss of what could have been, but cannot be recovered.

If you really want to get to know me, don’t waste time reading my bio or scrutinizing my professional successes and failures, get to know my wife and my children. My best work, the work that I’m most proud of, is the relationship I have with the love of my life whom I’ve been married to for almost three decades, and with my two grown children who now consistently teach me more about life than I taught them. While I’ve had more career success than I probably deserve, I’m just as flawed as anyone reading this post. What I can tell you is that I’ve always made my family a priority. I don’t regret a single second of time I’ve invested in my family, but I’ve lost track of all the regrets I have over time squandered on the job.

You see, everyone creates a legacy – the question is will it be one worth leaving? While a legacy is classically defined as something of significant and/or lasting value that survives its creator, the best legacy is one that can be lived before it is left behind.

The bottom line is this:

If you’re a superstar at work, but a slacker at home you’re not succeeding at anything other than being a disingenuous, ego-centric charlatan. If this describes you, you’re not a leader you are a poser. As a very wise person once said, “don’t waste your time investing in those who won’t be crying at your funeral.”

Whether you agree or disagree with what I’ve espoused above, I’d love to hear your comments below…

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Mike Myatt, is a Top CEO Coach, author of “Leadership Matters…The CEO Survival Manual“, and Managing Director of N2Growth.

Indutech, renowned business engineers and innovation specialists, will be presenting a 2-day innovation management course in Midrand in September 2010. The course strikes a strategic balance between flexibility and structure covering a variety of innovation related topics ranging from the basic definitions through to developing an innovation capability improvement programme in a company. Several of [...]

I've been pondering the "truths" we hold dear and wondering whether or not the mental models we were taught in college and graduate school hold up under the changes occurring in our economy.  Do the great business thinkers of the past twenty or thirty years and their models and descriptions hold true, especially when we introduce innovation into the mix?  Over the next few months I'll look at a couple of the models we hold dear and place innovation within the context of the model, to see if the model is extensible enough to account for innovation, or whether we may want to revise our thinking to account for innovation.

First up:  Porter's Five Forces.  Michael Porter wrote the book on corporate strategy.  Well, he actually wrote a number of books about corporate strategy, competitive advantage and a number of other topics.  The books that were mantras when I was in school were Competitive Strategy and Competitive Advantage.  In these books and others Porter introduced models, tools and methods to analyze the firm and its competitive position and its competitive advantage.  Two of these tools, the "Five Forces" model and the Value Chain model, are ones that have become ingrained in the way we think about businesses strategically.  What I wanted to know is:  does the model hold up in light of an increased emphasis on innovation?

The Five Forces model is basically a way of looking at an industry, and a firm within an industry, and all the factors that will come to play against that firm and its industry.  The Five Forces are:

1. Supplier Power
2. New Market entrants
3. Substitutes
4. Buyer Power
5. Competitive Rivalry

These are the "totality" of forces acting on an industry, and by extension, firms within an industry.  In the model, Porter didn't necessarily account for "innovation", but the ghost of innovation haunts the model.  For example, New Market Entrants.  This force accounts for firms that weren't traditionally in an market that decide to enter the market.  These could be large firms seeking to enter or disrupt an existing market, or entrepreneurs who will enter a market and chip away at a small subset of the customer base.  Those of you who have read Christensen will recognize the smaller entrepreneur or firm as a potential disrupter from Christensen's book the Innovator's Dilemma.  While Porter didn't explicitly call out disrupters, he did account for new market entrants.

Similarly he accounted for advances in technology and in trends.  He foresaw the impact of legislative effects on business as a discontinuity that opened the door for innovation.  He saw the power of innovation in supplier and buyer channels as well.

There are a few gaps from an innovator's perspective that bear examination, however.  Two that spring to mind upon initial examination are business model innovation and customer experience.  In Porter's mind, the business needed to define its business strategy and model and build competitive barriers to the five forces.  I think in hindsight that has proven only to create Maginot lines that other, more nimble firms have found easy to skirt and attack.  A firm should place a significant amount of emphasis on the development of its business model, but should also place some emphasis on the evolution or dramatic shifting of its business model as competitive pressures ramp up and the pace of change increases.  I don't think the model responds well to the increase in the pace of change and global competition, and in that sense must introduce nimbleness and agility into the model.

Secondly, the model was developed in a time of increasing systemization and process definition.  Buyers and sellers were considered as entities to optimize.  Now that we've reached a point of increasing saturation and commoditization in so many areas, firms must differentiate by improving customer experience - designing and innovating the customer interaction and experience rather than simply optimizing it.  In an age of product and service abundance, customers want individual service and attention, and have high expectations for the goods and services they buy and the partners they interact with.  Porter's model treats the buyers and suppliers and neutral third parties, which they no longer are.  They are now extended relationships.
On the whole, Porter's Five Forces holds up well in light of an increased strategic focus on innovation, although it never explicitly calls out innovation as a "force".  Innovation can easily be discovered in several, if not all, of Porter's Five Forces, and its impact is easily seen.  Porter might argue that innovation is simply embedded in each of the Five Forces, as to a certain extent is a concept like Six Sigma, where Six Sigma represents small, incremental change and Innovation represents large, disruptive change within each of the Five Forces.  This is one historical, well-respected strategic model that seems extensible and capable of incorporating innovation as an emerging business strategy.

Russian Nanotechnology Corp. and Russian Academy of Sciences Establish Technology Transfer Center (Nanowerk News) Russian Corporation of Nanotechnologies, RUSNANO, and the Russian Academy of Sciences (RAS) have jointly established Center for Technology Transfer (CTT). The project is implemented under a cooperation agreement between RUSNANO and RAS. The mission of the Centre is to commercialize knowledge and technology developed by the research institutes of RAS.

by Idris Mootee

Executives are increasingly convinced that businesses are not merely offering functional devices or products to help customers to get their jobs done, but also visual imagery, customer experiences, user identity and social connectedness. This new design consciousness is a result of many factors including the commoditization of quality manufacturing, proliferation of channels, over-saturation of brands and products and rapidly changing customer expectations. Plus a heightened demand for better aesthetic experience and usability given the increasingly complex interfaces for technology products. Design has (and should) become a critical element within the strategic tool kit for new product development. But it can be useful as part of the business strategy tool kit to create growth.

A question arises here, can art also become a strategic toolkit? “Artistic Thinking” in additional to. “Design Thinking”? How is art different from design? Design is often confused with art; some designs will eventually become art. And some art becomes design. Art is an important force shaping design and design is now becoming an important force shaping business strategy. Is there a connection between art and business? Hey, welcome to the world where everything is complicated.

Is art a state of mind or is design also a state of mind? Art, design and business strategy are about the articulation of an idea and each has different and increasing overlapping tools to help expresses itself and for manifestation. Let’s not talk about the downstream activities of business strategy, design or art. Each one of these has its craft side and toolkit.

People are saying design is important for business today, not many people are saying art is equally important. I think art is equally important for both design and business. Wonder how many of you would agree with me? Part of the reason design is moving upstream is because it is becoming predominant among companies and particularly marketers where the aesthetic/sensorial aspects have become key drivers in differentiation. But the meaning of design should not be reduced to a mere question of just look and appearance. Instead, design needs to be understood as something that powers the entire company. It is viewed more as an attitude that something that is linked producing new ideas from a core set of design-centered beliefs.

Can the same be said about art? Art should not be reduced to be something purely decorative or expressive with no connection (never mind influence) to business strategy. Can art be viewed as something that inspire new perspectives, new experimentation and inspirations for organizations beyond products. Is that a stretch? I am not sure.

Case in point: The Italian company Alessi is a prime example of an “artistic acting” company. Alberto Alessi, head of the company, thinks of Alessi as an applied arts research laboratory. At Alessi, design is viewed as an artistic and poetic discipline, while manufacturing conceives it as a tool for product development and marketing. The process of selecting projects to be prototyped rests with Alberto Alessi. Choices are based largely on his intuitive knowledge of what will appeal to the people. He describes his role as someone who mediates between the most interesting expressions of creativity of our times and the dreams of the consumer.

Apple can probably be classified as the same type of company where intuition is central to the company’s basic innovative processes. If you think about how Apple comes up with new products, it is definitely not a “design thinking” type of company, it is an “artistic thinking” company that relies on intuition and a heavy emphasize on personal expressions.

Someone once points out the paradox on art (the same is said about pornography, no illustrations here sorry) is that art is difficult to explain but easy to recognize. You know it only when you see it. Design is something we can see and touch, art is difficult to be identified. Over 50% of art I’ve seen I would not consider art, but others can have exactly the opposite point of view. That is the single biggest distinction between art and design.

And for strategy, 50% of the time you can describe a company’s business strategy by looking at what they do and what they produce or sell, the other 50% of the time you don’t know exactly where a company is going. When a great company (and its brand) touches our deep emotional state, it is only when businesses are to be viewed the same way as a painting or sculpture. They have to be looked upon as an expression of something that the artist experiences and not merely as a functional representation of a real-world product or commercial entity. If you look at companies such as Virgin, Alessi and Apple, these companies are works of art themselves.

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Idris Mootee is the CEO of idea couture, a strategic innovation and experience design firm. He is the author of four books, tens of published articles, and a frequent speaker at business conferences and executive retreats.

Foresight

by Venessa Miemis

[This is part 4 in a 12 part series. The topics covered so far are Pattern Recognition, Environmental Scanning, and Network Weaving.]

Foresight

The ability to develop foresight is a cornerstone for forward thinking individuals and change agents. I can say that on the personal level in my own life, when I did not have a clearly defined goal or vision of what I wanted or where I was going, I floundered. My ability to “see” potential opportunities or pitfalls was clouded, and I fell into a rut or holding pattern in life. Then, when those wild cards and “black swan events” did occur, I was completely blindsided and unprepared to handle them. I think this applies at the individual as well as the organizational level.

So what exactly is foresight? Here are a few definitions from the wikipedia page on Foresight (Futures Studies):

• Critical thinking concerning long term development
• Debate and effort to create wider participatory democracy
• Shaping the future, especially by influencing public policy

These components can also be restated as follows:

• Futures (forecasting, forward thinking, perspectives)
• Planning (strategic analysis, priority setting
• Networking (participatory, dialogic) tools and orientations

Essentially, foresight the ability to see “the long view;” to look at information from the past and present, extract the patterns and lessons, and use them to inform decision-making in order to impact the direction things go into the future. There are a range of tools for foresight, the most common being: environmental scanning, trend analysis, brainstorming, modeling, gaming, visioning, and scenario development. Scanning was already covered earlier in this series, so here is a brief overview of the others.

Trend Analysis

In order to have an idea of what the future may hold, it helps to be aware of the current driving forces underway. Though there are several ways to categorize overarching trends, a useful reminder is the acronym “STEEP”:

• Social
• Technological
• Environmental
• Economic
• Political

These categories can then be broken down into subcategories. (i.e. “Social” could be viewed at the levels of culture, organization, and personal). Once the trend is identified, we can look at both their causes and impacts. Also, since events and ideas do not exist in isolation, it is useful to think about the implications of trends across several or all of these areas. For instance, a rise in life expectancy might be caused by rising living standards, better medical treatments, and healthier environments. The corresponding impacts of this trend may be that a longer portion of a person’s life is spent in retirement, and so there will be an increasing demand in goods and services for the elderly, and perhaps a bigger financial strain on families to care for aging parents or grandparents.

Brainstorming

This is a favorite of mine, and I spend a portion of every day thinking of new ways to think about things. One of the features of building intelligence, some would say, is about being able to expand your context, see things through multiple lenses, and switch perspectives quickly and with fluidity. Being able to wear these different “hats” when thinking about problems is helpful for me to generate new ideas. Mapping out ideas and people also helps me to see “the big picture,” and think of new ways of combining information or aligning people. For instance, mindmapping software like Mindmeister or Compendium are useful online tools for creating a visual aid in problem solving (paper or a whiteboard also work).

To show a personal example, I started putting together a map of my twitter connections a while back so that I could be more effective at network weaving. It made it easier for me to build bridges between people, and get exposed to interesting ideas that I could integrate and build upon. Map here. The next major map we’re working on is a visual description of the components of the platform/environment that are necessary so Junto can exist and evolve.

Modeling

Designers and architects are familiar with the use of physical models to help people visualize future structures or products. As thinkers and philosophers envisioning our cooperative, technological future, we also create mental models to represent what this “thing” that we’re all talking about might look like. Call it fantasizing, engaging in a thought experiment, or running a simulation, we are able to think about potentials once we have constructed a model within which we can apply our theories.

Gaming

Called serious games or serious play when used in this way, gaming is a powerful way to simulate potential realities. The military uses them for training, and there are many projects going on to encourage people to take action and change the world, like Urgent Evoke. Players are able to role-play and simulate how they would respond in situations, interact with others, and create positive solutions in a group environment. The idea is to create cohesion and acceptable decisions that best serve the community. And then actually make it happen.

Visioning

From what I’ve experienced, clarifying a vision is one of the most powerful mechanisms for engaging an organization or community and getting them excited to unite. Each of the posts on this blog in some way is clarifying my own vision for the future, both my personal future and a greater future I would like to see for humanity. Creating a clear vision is a precursor to goal setting and planning, and as I see it, a key to mobilizing people. There is a nice guideline in the book Futuring that breaks down the process of “Preferred Futuring” into these eight tasks:

1. Review the organization’s common history to create a shared appreciation.
2. Identify what’s working and what’s not. Brainstorm and list “prouds” and “sorries.”
3. Identify underlying values and beliefs, and discuss which ones to keep and which to abandon.
4. Identify relevant events, developments, and trends that may have an impact on moving to a preferred future.
5. Create a preferred future vision that is clear, detailed, and commonly understood. All participants, or at least a critical mass, should feel a sense of investment or ownership in the vision.
6. Translate future visions into action goals.
7. Plan for action: Build in specific planned steps with accountabilities identified.
8. Create a structure for implementing the plan, with midcourse corrections, celebrations, and publicizing of successes.

And of course, it’s not about creating MY vision, but about creating a SHARED vision. So many of us are talking about creating a better future. But what does it look like? Have we defined it? Have we described it? Who are we within it? What does society look like? What does currency look like? What does interaction look like? I see so many people working on aspects of it, but how do we link these ideas together to create a clearer picture of this shared vision?

If we can see it, we can build it.

Scenario Development

This is where the power of the narrative comes in. Throughout human history, we are defined by the stories we tell each other and ourselves. We create meaning and understanding by the way we remember our stories, like personal cargo that we carry in our minds. When thinking about the future, whether it’s the future of society, the organization, or the self, developing a series of scenarios allows you to objectively deal with uncertainty and imagine plausible costs and benefits to various actions and their consequences. It is often suggested to create at least three scenarios when considering future events or situations involving decision-making, by identifying futures that are possible, probable, and preferable. Again from the Futuring book, here five sample scenarios are suggested:

1. A Surprise-Free Scenario: Things will continue much as they are now. They won’t become substantially better or worse.
2. An Optimistic Scenario: Things will go considerably better than in the recent past.
3. A Pessimistic Scenario: Something will go considerably worse than in the past.
4. A Disaster Scenario: Things will go terribly wrong, and our situation will be far worse than anything we have previously experienced.
5. A Transformation Scenario: Something spectacularly marvelous happens – something we never dared to expect.

So once the story has been written that describes what each of these scenarios looks like, the conversation can begin. What is the likelihood of each of these? What is the desirability? What are the correlating values of the people? What actions can be taken today to steer the ship and influence the events that will create or avoid these various scenarios?

Other elements of scenario development include forecasting and backcasting. While forecasting starts in the present and projects forward into the future, backcasting starts with a future goal or event and works it’s way back to the present. In this method, the sequence of events or steps that led to that goal are imagined and defined, so that a roadmap to that desirable future is created.

Become a Fearless Futurist

So this is a brief overview of foresight and “futures thinking.” There are many many resources to learn more about these thinking tools, and I hope your interest is piqued and you keep exploring!

Here’s a few places to start:

• Foresight Education and Research Network
• Acceleration Studies Foundation
• World Future Society
• World Future Studies Federation
• Global Foresight
• Future-focused blogs

Image credit: Gavin Keech

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Venessa Miemis is a Media Studies graduate student at the New School in NYC, exploring what happens at the intersection of technology, culture, and communication. Connect with her at www.emergentbydesign.com and on Twitter @venessamiemis.

by Matt Heinz

In every new market – with new products in new categories that solve a new or previously-unsolved problem – there’s a group of early adopters. These are the customers that already get it, that are predisposed to try something new, and are the quickest to buy.

The early adopters are passionate about what you’re doing, they give you a lot of feedback, and they’re vocal about what they want to see you do next with the product.

Problem is, early adopters don’t necessarily reflect the rest of the market. They might make up the bulk of your earliest customers, but it’s dangerous to build your long-term product strategy, marketing plan and messaging framework based on their direct feedback.

The next group of customers – the post-early adopters, those that won’t dive in right away but will slowly warm to what you’re selling as the market matures, as they see others using it, and as their understanding of the product and solution evolves – are going to think about you in a different way. They’re going to think about the problem a different way, think about the outcome they’re seeking in a different way.

The product you’re selling may or may not need to evolve significantly to reach this new and much larger audience. But the way you approach them, the way you resonate with their current situation and describe a positive future that your solution can bridge to, that needs to be different.

Many companies build their product strategy and marketing plans based on feedback from their early adopters. They take feedback and priorities from that early audience as indicators of what the broader market thinks. That’s dangerous thinking. Unless you understand both the early adopters and the broader market – and especially understand how they act, think and buy differently – tapping into that broader sales and growth opportunity will be far harder than it needs to be.

Editor’s Note: I’ll e-mail a free Stoking Your Innovation Bonfire sample chapter to anyone who correctly identifies the brand of boots in the above photo using our contact form.

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Matt Heinz is principal at Heinz Marketing, a sales & marketing consulting firm helping businesses increase customers and revenue. Contact Matt at matt@heinzmarketing.com or visit www.heinzmarketing.com.

by Stefan Lindegaard

I had a meeting with a couple of innovation managers from a Danish company today. We got into a discussion on the open innovation efforts of Danish companies – or should I say the lack thereof.

I am still trying to figure out why Danish companies do not embrace open innovation more actively. I might also be wrong as some companies challenge me on this by saying that they do quite well with open innovation. They just do not talk that much about it.

Hold on! How can you really believe in open innovation and then more or less deliberately keep a low profile with your efforts? A key objective is to become the preferred partner of choice within your industry and ecosystems. This does not happen by staying quiet. Open innovation requires visibility and communication – internally as well as externally.

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Stefan Lindegaard is a speaker, network facilitator and strategic advisor who focus on the topics of open innovation, intrapreneurship and how to identify and develop the people who drive innovation.

A few years ago I heard a talk by the group R&D exectutive of a global construction company. I’ve known him for a while and I know that he is one of the most enthusiatic advocates for innovation that you are likely to come accross, but when he was asked about innovation in some of the large projects that he was currently involved with his response was very interesting. I can’t recall the exact quote but essentially what he said was that anyone who took it upon themselves to start innovating in the middle of the job would have to give some serious explanation as to what they were doing and why they thought it would be a good idea.

The trouble with innovating in large projects is that there are interdependencies between the components that make changes risky. Unless we are confident that a component is free from the others and change will not compromise the system then potentially innovation can have catastrophic consequences. In the projects that Tim and I look at as part of research and consulting, innovation is very ‘front end’ compared to the tinkering and epxerimentation that can happen in products and services. Successful project innovators need to be good at getting the right ideas from the right people at the beginning. This is a challenge because this is when the project is most ambiguous. We have just been research a major infrastructure project which had a lot of troulble because a group of experts that need to be on the project at the beginning weren’t aware of what was happening in the project until much too late, and reversing the investments made in the project will be expensive. In large organizations, knowing who to bring in at the beginning of a project is a critical innovation skill that is different from product innovation management.

On the other hand, technology is making project innovation easier. Experimentation can happen in the virtual world through CAD and other simulation techologies. Experimentation and prototyping is still possible, even in the biggest projects.

Your Country Your Call, Ireland's massive open governement campaign to help bolster the country's economic future, is now in the final stage of determining winning proposals. Hundreds of thousands participated by submitting, voting and commenting on ideas through the WebStorm  powered website, and now just five ideas are left in the running. On September 17 the chairman of the competition, David Byrne, and his panel of seven judges will award the two winning submitters their €100,000 prize and €500,000 grant for implementation.

Submitters had about two and a half months between February and April to submit their proposals, of which 20 were selected as semi-finalists. Accompanying their selection was a rigorous six-week coaching period followed by interviews with the judges to determine five finalists. The final step is a two-day ceremony leading up to the final decision, where the judges will annouce which proposals are the most creative and feasible for implementation. The ideas, which range from tourism to finance to green energy solutions, are part of Ireland's greater plan to transform their economy through new jobs and opportunities to secure a vibrant economic environment moving forward.

The first of the five finalists is Brody Sweeney, a chain retailer who proposed creating an Irish "Superbrand" to promote Irish tourism and cuisine, thereby creating new jobs in two sectors. Next is Neil Leyden, a screenwriter and digital media consultant who proposed turning Ireland into a global media hub through the creation of an "Irish Content Industry Association" and global 'Media Park' to attract global content industries. The main goal of Leyden's plan is make Ireland the global center for creation and distribution of digital content, and ambition task by any measure.

The third finalist, Gordan Hyland, is a technology and finance guru who calls for the creation of an intellectual property-based financial securities market to create long-term employment and revenue. Fourth is electrical engineer Peter Enda Kavanagh, who proposed a plan to install large-scale solar photovoltaic panels on existing Irish wind-farms, utilizing existing resources, creating new jobs and cutting back on energy costs now and in the future.

The final idea, submitted by diverse businesspeople Cianán Clancy and Colm MacFhlannachadha, calls for the implementation of what they're calling 'The Data Island Strategy.' The intricate plan looks to build a 'Green Mega Data Centre Freezone' and an 'International Innovation Area,' both of which set out to build a global 'entrepreneurial and innovation ecosystem' with it's main focus being global digital services.

Looking forward to seeing which ideas are chosen for implementation and how these ideas, once realized, will positively improve Ireland's future. Stay up-to-date on news and developments at Your Country Your Call.

 

First, a joke.  Do you know why you'll never meet a one-handed economist?  Because all economists say "one one hand (long explanation).  On the other hand...

I'm beginning to wonder if all of the answers to all of our problems lie exposed, like bleaching dinosaur bones, somewhere in our immediate past, or whether this time may be somewhat different.  Several noted economists (hence the starting joke) suggest that we need to look to the recent past for answers to our current problems.  Krugman, in the NYT, argues that our situation today is very much like 1938.  We have too little stimulus and a too conservative population.  He quotes the Gallup survey from 1938 where 63% of the population favored tax cuts to speed a recovery, while 15% favored increased government spending.  Things never change. 

Another writer actually indicates that no, our situation is really more akin to 1930, not 1933 or 1938. No wonder economics is called the dismal science.

Let's look at this in an entirely different way.  The US economy in the 1930s was still very much based on agriculture and manufacturing - a production economy.  Our agricultural production had fallen (Grapes of Wrath, anyone?) due to the Dust Bowl and terrible tariffs on imports and exports.  Our manufacturing had fallen due to a contraction of the economy and tariffs.  What propelled us out of the Great Depression, finally, was a war.  Our factories and farms starting exporting to the UK, France and Russia as WW II started in 1939 and 1940, and accelerated when we were bombed by the Japanese and entered the war in earnest.

But comparing the situation now to the situation that existed in the 1930s seems like comparing the horse and buggy to the modern automobile.  Yes, they are both for transportation, but use different fuels, have different delivery capabilities, and require different maintenance.

Today, we face a crisis in the financial markets, not unlike the Great Depression, but what will pull us out is not manufacturing jobs or agricultural jobs.  Today agriculture represents less than 2% of our employment base, and manufacturing somewhere near 20% at full production.  That means that 78% of our workforce is employed in service industries, knowledge industries, academia or the government.  In the past, stimulating agriculture and manufacturing could dramatically increase employment, but today that will have only a secondary or tertiary effect on employment.

What we need to do is stimulate the rapid conversion of ideas into new knowledge, new intellectual property, new products and services.  While we could stimulate manufacturing in the past, and need to do that now, we need to accelerate our ability to create interesting and valuable new ideas and intellectual property much faster than most organizations and firms can do so today.  A burst of new products and services based on new ideas will resonate in the US, but can also be easily and readily exported.  And to grow our economy, we need to spur exports.  Again, that's not going to be done to great extent with manufacturing, but with ideas.

What would a stimulus in 2010 look like (looking forward for solutions rather than backward)?

First, either make the Patent Office more efficient and effective by increasing it or completely outsourcing it.  Today the Patent Office is overwhelmed with submissions and can't respond effectively.  Let's put far more resources into helping people protect and commercialize their ideas.

Second, improve technology transfer out of the Federal Government and universities.  Today, many universities and many national labs do a good job of creating new ideas and new technologies, but do a terrible job translating them into commercial products and services.  We need to revamp our technology transfer policies to make them more open, more friendly and more efficient.

Third, recognize that many ideas are now about services and business models.  We need better ways to develop, protect and promote ideas that are conceptual in nature.  This recommendation has to do with documenting the ideas, protecting the ideas and commercializing the ideas.

Fourth, innovation exists where people and ideas meet.  Just as our economy boomed when the national transportation and highway legislation was passed, we need more "infrastructure" for communication, interaction and networking.  A national infrastructure project based on encouraging high speed internet and wireless access could become this century's answer to the highway system in the 1950s.
We could go on - but I'll stop here.  Innovation is more important to pull us out of the recession we are in, and the conditions are far different than they were in previous recessions/depressions.  We need to focus on the innovation investments that can pull us out of the recession and put us on a course for renewal and sustained growth and leadership.  Looking backward for answers is not the right perspective.  We have new problems and we need new thinking to solve those new problems.  If it was good enough for Einstein it should be good enough for us.

If we are trying to innovate, what is our actual job?

According to Mark Earls in Welcome to the Creative Age, our job is to invent the future.

Seems reasonable to me. Here is how he build that argument:

…opinions are what you get back from customers once you’ve done something, so they are largely irrelevant to you. They aren’t the precondition for customers doing something or a good guide to what you should do. At all.

So don’t waste your time with ask/answer research and opinions. Throw away the reassurance of quoting the consumer or stats garnered from opinion polls. Watch your customers, observe them, live with them, but don’t expect them to tell you much themselves. Because they can’t.

Instead, recognize:

• It is your job to invent the future – you are the inventors.
• It is not the customer’s job – they are not good at the future but they might buy your invention if you get it right (or not).

I’m in the process of working through some focus group results for a consulting client. Against my advice, they insisted on doing this work to try to figure out the best use for a new piece of technology. So this section from Earls rings particularly true for me at the moment.

I keep trying to tell them that it is up to them to invent the future – customers may well play a co-creative role in the process, but first my client has to come up with an idea, a proposal to put in front of their customers. It’s their job.

Since they’re not listening to me, I hope that you will.

If we’re trying to innovate, it’s our job to invent the future. As simple as that. And as frustrating, vexingly hard as that too. In any case, it’s our job. Time to get started.

(photo from flickr/redteam under a Creative Commons License (discovered after searching for “contraption”!))

Last week McKinsey released their 2010 innovation survey. It makes a very interesting read and is based on a survey of over 2000 respondents from several industries. In the report only 39 percent of respondents say that their companies are good at commercializing new products or services.

by Stephen Shapiro

In my blog post, “How Can Goals Enhance Creativity” I said…

“…As long as everyone in the organization believes they are playing a game which is designed to get them energized today, and it is not specifically about hitting the target, I can assure you that people will be more motivated.”

Games can be a useful tool for enhancing creativity. They make work more fun, they reduce stress, and they get people in action.

HOWEVER…

Not all games are created equally. There are adult games and kid games.

With adult games, there tend to be rigid rules, the games have an ending, and there are winners and losers.

Think about nearly every game we play: Monopoly, poker, or basketball.

They typically have a complex set of rules that all of the players need to adhere to. If you break the rules you “go to jail,” are disqualified, or get penalized.

Adult games end. The game is over when all of the other players are out of money, when the “clock” says there is not more time, or when everyone has had their turn.

And nearly every adult game has a winner and one or more losers. They are competitions.

Contrast this with kid games.

Kids play games with very loose rules, the game continues until they say it ends, and there is no concept of winner/loser.

If you watch kids play. They tend to have very few rules in their games. And if there are rules, they make them up as they go along. They improvise. Even universal rules don’t apply to kids. They can don a cape and fly through the air, defying the laws of gravity.

Rarely is a stopwatch involved when kids play. They play the game until they get tired of playing that game. And then they invent a new game. The only clocks involved with kid games are the watches on the wrists of their parents. The adults end the game when it’s dinner time or bedtime.

And there are no winners or losers. They don’t even have that concept. Yes, they might have battles with imaginary swords or super powers. And there are victims who get hurt or die in the heat of battle. But they come back reinvented as a new character. The play does not end at death.

Kids play for the sake of play and no other reason.

Adult games can limit creativity. The rules, deadlines, and pressure prevent the flow of new ideas. They create stress.

If you want to enhance creativity, passion, and productivity, I encourage you to play kid games. These timeless, unbounded, and rule-free games can create an environment of free-flowing-thinking. As mentioned in previous blog entries, studies show that 98% of 5 year olds test as highly creative, yet only 2% of adults do. We don’t lose our creativity; we learn habits which stop it from emerging.

I contend that the types of games we play reflects our level of creativity. When people are most creative, they play kid games. When they are least creative, they play adult games.

Maybe it is time to recapture our creative youth and start playing more kid games.

In future blog entries, I will discuss HOW kid games can be used to enhance creativity, productivity, and success.

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Stephen Shapiro is the author of three books, a popular innovation speaker, and is the Chief Innovation Evangelist for Innocentive, the leader in Open Innovation.

The 2010 Technology and Innovation Report - Enhancing Food Security in Africa Through Science, Technology and Innovation - focuses on the challenges of improving agricultural performance in Africa and the role of technology and innovation in raising agricultural production and incomes of all farmers, including smallholder farms.