Sep 5, 2022 | Customers, Innovation
Some weeks ago, I found myself as a participant in a workshop touted to be one that was focussed on solving a problem by use of ‘design thinking’
Unfortunately, it was a waste of everyone’s time. Partly this was because the problem we were supposed to be solving was inadequately and inaccurately defined, and partly because the person running it had no practical idea of what ‘design thinking’ really was.
Spoiler alert: it has nothing to do with the visual definition of ‘design’
‘Design thinking’ is no more than a process that starts and ends with delivering value to the customer.
The typical stages are:
- Understanding of customer behaviour.
- Ideation based on that understanding
- Prototyping and testing of solutions to the challenges faced by customers
- Continuous and Intense feedback during testing and prototyping
- Integration of the finished prototypes into the final product offering
- ‘Shipping’ the solution to customers.
The greater the involvement of customers during this process the better.
Simple to say, very hard to do well.
PS. The fails in design thinking are rarely as obvious as the example in the header.
Aug 31, 2022 | Innovation, Marketing
Processes are the means by which things get done. From the simplest thing like cleaning the coffee machine in the lunchroom, to launching a major new product, it happens by way of a series of activities culminating in the objective being achieved.
It makes sense to do the same thing the same way every time, assuming you get the desired outcome. Doing so delivers stability, reduced errors, and makes the processes transferrable between people.
Process stability is a fundamental foundation of being able to scale a business.
However, processes do not innovate. They can replicate the past with great productivity benefits, they do not take risks. They squeeze out creativity, as it is variation to the process, and therefore not allowed.
Let’s look more closely at innovation, which can be broken down into a series of repeatable steps, and thus becomes a process.
There are two types.
Incremental. This is where there is continual improvement, the adjustment of processes to deliver benefit. The preconditions of incremental innovation are twofold:
- First, you need stability to be able to execute on CI, and
- Second, you need the culture of experimentation, continuous A/B testing to prevail.
Break-through. This second category is, to me, real innovation. It can create new markets and demand, of the type Apple deployed with iPod, iTunes then the iPhone, and Henry Ford did with the Model T. You need to be able to see where there is new potential, new markets, new demand, and be prepared to throw the baby out.
The culture and processes that support these two types of innovation are very different, effectively mutually exclusive, so you must make a choice. Trying to do both inside the same corporate ‘shell’ rarely works.
The former requires alignment, stability, continuous improvement, and several other popular management cliches.
The latter will die under these constraining circumstances, it requires insulation, a ‘skunk-works’ of some sort to succeed, a culture that enables experimentation and the attendant risk, giving the efforts immunity from corporate ‘sameness’.
Scott Adams reflects this pardox beautifully in this 2012 cartoon used for the header.
Aug 29, 2022 | Change, Innovation, Strategy
For some years academics have been mumbling to themselves about an observed phenomena they generally called ‘Flattening‘. The discussions have been centred around technology, but the impact can be seen in a much wider context.
The idea is that technology acts as the rising tide in the old saying that a rising tide lifts all boats. By rising the average level of the ‘water’ the differences between individual companies and industries are removed, that the offering becomes increasingly homogeneous until a new technology arrives, lifting the owner clear of the competitive debris.
There are numerous examples.
The emergence of the Internal combustion engine wiped out long established industries and companies in the horse drawn wagon, whip, and horse breeding and breaking industries of the time. As they disappeared the automobile industry and its supply chains emerged, now in the early stages of being ‘flattened’ in turn by electric vehicles.
Before the internet, information existed in small silos and did not move much, and then only slowly. Industries that relied on those characteristics were ‘flattened’ out of existence. Yellow pages, classified newspaper ads, and in their place emerged new industries. Google, Facebook, and the plethora of other communication and search platforms.
Let’s consider energy production.
For thousands of years people used wood or coal to heat their houses and water. In 1698 Thomas Savery patented a machine that drew water out of flooded mines by using steam pressure, then in 1784 James Watt patented the steam engine, which for the next 150 years powered most industrial development. In 1831 James Faraday created the first very simple electrical generator that converted mechanical energy to electrical energy.
So what you ask.
Look at the current environment with the concept of ‘Flattening’ in mind.
Internal combustion automobiles are in the early stages of being ‘flattened’. This has been initiated by Tesla, in parallel with the batteries required to run the cars, but which will have huge implications across the energy sector.
Coal, the dominant world source of energy has suddenly become a pariah. It is polluting the atmosphere with the attendant changes in climate, leading to rapid growth of renewables, both personal and commercial scale. New fossil fuel projects, especially coal, are now being locked out of capital markets as they see their investments being stranded. Only idiot governments with an eye to donors is keeping them alive via subsidy and barriers to entry of renewables.
The tide however is inexorable, and fossil fuel will be redundant soon. As Hemingway noted in the Sun also Rises, when one of his characters was asked how they went bankrupt: “Gradually, then suddenly’ was the response.
That is what is happening in power generation.
Renewables have been around for 25 years, slowly evolving as the technology improved. It seems to me we are at, or almost at, the ‘Suddenly’ point. In the absence of being in front of the wave of changes, we will be left behind in the technical race to build the new industries that will emerge, again.
Flattening is also happening in some way in your domain, it is the normal course of development. the challenge is to see the elephant and react to it in time.
Aug 19, 2022 | Innovation
Usually the term ‘gestation period’ the time between conception and birth, is used for mammals, but it is just as relevant for innovation.
In the animal world, it is a fixed and consistent period for each species, varying from the 12 days it takes the Virginian opossum, to 22 months for the Indian elephant.
The definitional complications of using the term for commercial innovation come from the uncertainty in fixing the time of conception and birth.
The best definition I have seen of innovation is the one used by Sir Ken Robinson: ‘Innovation is an original idea that has value’. It is however just one of many.
Is that new flavour of product ‘A’ touted by the marketing department really an innovation, or just a line extension?
Is that fascinating scientific phenomena observed for the first time an innovation, or just something interesting to scientists that is waiting around for a commercial use to be created?
I remember seeing for the first time in 2006 the TED presentation by Jeff Han of the multi-touch interface. He had fun playing with it on the stage, but seemed unsure of the direction to commercialisation. Since then, the technology has been incorporated in every smartphone. Was the gestation started when Eric Johnson published a paper and was granted a patent in 1969, when Bell Labs Bob Boie first created the transparent multi-touch interface in 1984, when the PhD student in Jeff Han’s lab mastered the maths to make images interactive, or when Apple decided to apply the technology to the first touchscreen iPhone in 2007.
The gestation of market changing ‘Innovation’ is typically long, much longer than is easily recognised when you look at the end product.
The angst created by the sudden emergence of mRNA vaccines for Covid is widespread. However, it is misleading when you know that the mRNA molecule was first theorised in the early fifties, isolated in the lab in 1961, and worked on continuously at a low level by some major players, particularly after CRISPR technology was developed. Covid was just the catalyst that enabled 70 years of work to be brought to market at a speed that appeared to be unprecedented.
On the other hand, the marketing team I led in the late 90’s brought ‘Dare’ flavoured milk to market in 12 weeks. While it was and remains a commercial success, there was nothing new involved, just a smart rearrangement of existing packaging and market positioning in the large and then undeveloped flavoured milk market.
Aug 10, 2022 | Innovation, Leadership, Strategy
When are the funds for an innovation initiative generally available?
At the beginning of a project.
When are the funds for an innovation project generally needed?
Increasingly towards the commercialisation, or completion of a project.
To me, this usual pattern of financial resource availability is arse about.
At the initiation of a project, the resource needs are peoples time, lab space, and the commitment from senior management., The need for financial resources is usually limited. However, it is this time that projects need to gather momentum, which means financial resources and forecast outcomes are included in budgets, and formal planning processes. The best way to ensure a project is supported is to ‘boost’ the promised returns and shorten the lead times.
Unfortunately, this locks in expectations that have impacts on the way projects proceed.
A project that promises 25% IRR in 18 months will almost always win the resources race over a project that forecasts 30% IRR in 5 years. This sort of financial analysis is how choices are usually made, ignoring the strategic implications of the differing projects. This is because we have not found a way yet to reliably tell the future, and immediacy is a powerful motivator.
On top of that you have the favouring of evolutionary ‘innovation’ over ‘revolutionary’ innovation.
Most successful businesses become successful by incrementally improving products and processes over time, and are prepared to spend money to keep the evolution going. The challenge of this is that it crowds out the revolutionary innovation, the ones that have the potential to change markets, rather than just do more of the same but just a bit better.
The examples of these abound.
When I was working for Cerebos in the early 80’s, we marketed a muesli under the brand ‘Cerola’. It was in the days when there were only a few breakfast cereals on the market, unlike today. Similarly, confectionary was less fragmented. We came up with the notion of a muesli bar, a ‘healthier’ snack than anything then available, with the convenience and taste of confectionary for kids lunch boxes. We did extensive product development, several pilot plant trials, and a little market research. In the early stages I had done a forecast profit and loss, timeline, and we had established the capital costs necessary for the changes to the existing muesli line. These were included in the Cerebos budgets as project ‘M’. The numbers were modest, but at the time, pushed as far as I felt comfortable. When it came to the final go/no go decision, the project was binned, as the forecast IRR based on my modest sales forecasts did not meet the hurdle. A year later, Uncle Toby’s came out with pretty much the same product and positioning, and did my annual sales forecast in the first month. Opportunity missed, and lesson learnt.
Kodak, that well known exemplar of the missed opportunity, not only invented the digital camera in 1975, they brought out the first viable digital SLR, the Kodak DCS-100 in 1991. While it was bulky, and expensive, it was the first. In 1994 Kodak supplied Apple with the ‘Apple QuickTake’ manufactured in China to a Kodak design. Also in 1994, Kodak brought out the NC2000 designed for photo-journalists.
So, Kodak did not miss the digital camera revolution, they led it, but simply failed to see beyond the boundaries of the photography business model as it had evolved over the previous century. They saw innovation as an evolutionary process, not revolutionary, as that carried the risk that their existing hugely profitable model would become redundant. None of the senior management over that time wanted to fund the risk of shooting the cash cow upon which they all depended.
Cerebos by contrast were shackled by a short-term focus on an unrealistic financial expectation that ignored the strategic value of the opportunity to generate sales, and also to open a new market that carried and solidified the Cerola brand.
In both cases, a huge opportunity that emerged from the fringes of their markets were subjected to a muddle headed and front-loaded financial calculation, ignoring the strategic implications of the opportunity.
Header source: The extensive StrategyAudit ‘slide bank’ built up over 30 years.
Aug 8, 2022 | Innovation, Marketing, Strategy
Black and white thinking is easy, there is right and wrong, you decide which side of the fence you are on, and stick to it.
Luckily, life is not like that. Life is a mass collision of colours, ambiguity built on ambiguity, built on uncertainty. That is what makes it interesting, and worth living.
Following the previous post that offered 9 strategies for more impactful decisions, it seemed appropriate to observe that the great advice in that post is useless in the absence of being able to see a problem from a number of perspectives.
In other words, see all the colours.
Most problems we face in strategy development are wicked ones, where there is no obvious right and wrong answer, where there are nuances on top of nuances, second order impacts, and where definitive data is hard, if not impossible to find.
Thinking in a binary manner means that you dismiss all these opportunities for creativity because it is somehow inconsistent with your existing views.
This also means you lose sight of most of the stuff from the alternative choices, which is where the richness usually hides.
Differences of opinion cause tension, discomfort, and room for conversation which become challenging for a binary thinker.
Thinking and then communicating in a nuanced way is an enormously valuable skill.
Relationships that last can accommodate the differences caused by the grey areas. It requires that you can hold seemingly inconsistent ideas in your mind at the same time.
Binary thinking means you cannot hold those conflicting ideas.
The question every time in a disagreement, is the extent to which the tension created by differences in opinion are healthy.
We are used to seeing things in a binary manner, it is the automatic response, but we need to find a way to manage the inconsistency and ambiguity. We need to be flexible, as well as being driven by the rules.
The biggest challenges we face have the need to be able to dance with the facts, what works today, may not work tomorrow.
Overdoing structure removes the flexibility, and the opportunity to see things that may become important.
We think most problems can be solved, that is the base assumption we always have, but the conventional wisdom does not always work.
As a kid I lived on the beach, surfed a lot. The water pushed into the beach by the waves needs to get back out somehow, so you have ‘rips’. The area that allows the water to return from the beach. When surfing, you go with the rip, it will take you out, try and swim against it, you will just get tired and make little or no progress. You need to be able to swim at an angle, use the rip to take you out, then move across towards where the waves are.
This skill works in problem solving, finding bits of a problem that are resolvable, like getting a single wave in a session in the surf, you get the thrill of that great wave, use the rip to take you back to catch the next one. It is a process
Tension between people who hold differing views is healthy when managed well. This is when there is a recognition that there is no right or wrong answer to a wicked problem, just the better choice at this point. Then the differences in opinion can better hold the outcomes of the decision to account, it will increase the opportunity to pick up the problem molehills before they become mountains.
Ambiguity and bias can be used constructively.
Embrace your opposites. It indicates you recognise there are differences, give permission to voice the unfamiliar perspective. This is the opposite to just having people with you that agree, then there is no tension, no opportunity to see the differing perspectives.
One side of any question is rarely completely right, and the other completely wrong, we must be curious to see the reasons that the others see it differently.
This is how we produce creative new options that reflect life.
Header cartoon credit: Tom Gauld in ‘New Scientist’ magazine.
