Monthly Archives: August 2010

Innovation [25-08-2010]

Another week and another collection of interesting ideas from around the internet.

As always, thoughts and/or comments are greatly appreciated.

Basketball as an innovation metaphore

I just realised that the approach to basket ball described by The no-stars all star, from the NY Times, is a nice model for innovation (whatever that is).

I’ve been struggling for a while to understand how to define innovation other than retrospectively (isn’t hindsight a wonderful thing). We can pin down invention, customer need, product development, marketing etc. — all the elements to make an innovation successful — but picking an innovation seems the impossible task.

Efforts to define and codify innovation are like capturing lightening in a bottle. You can’t systematise a process which has a large degree of luck to it. What you can do, though, is to be prepared. This is where tools like design thinking fit in.

The interesting thing about the basketball article is that the coach admitted that basketball is a numbers game. Given the game’s high scoring rate, it’s not enough to have killer skills; there’s a large element of luck involved: being in the right place at the right time.

The coach’s approach is to try and increase his chances of being lucky, which he uses two tactics to achieve:

  • Try and be as efficient as possible.
  • Try to make your opposition as inefficient as possible.

The coach grinds the numbers to understand what are the odds of sinking or blocking a shot in each and every position on the court, and for each and every player. He then focuses on positioning his players to improve his odds, while reducing the odds of the opposing team. This makes his team more efficient, and more likely to capitalise on an opportunity, and the opposition less efficient, and less likely to capitalise on an opportunity. Think: forcing an opponent to shoot from the right when he prefers (and is more successful with) the left.

A common mistake is to assume that innovation is a creative processes: it’s not (you can always steal the idea rather than think of it yourself). Many of the tools we use to help companies to manage innovation are focused on making them more efficient in managing the innovation journey: focusing their energies where they are needed the most. Now with basketball as an inspiration, it might be possible to bring these tools together in a more scientific framework.

Think “in the market,” not “go to market”

A friend of mine{{1}} made an astute comment the other day.

We need to think about “in the market” models, rather than “go to market” models.

[[1]]Andy Mulholland @ Capgemini[[1]]

I think this nicely captures the shift we’re seeing in the market; businesses are moving away from offering products which (hopefully) will sell, and adopting models founded on successful long term relationships. This is true for both business-to-consumer and business-to-business relationships, as our success is increasingly dependent on the success of the community we are a part of and the problems that we solve for (our role in) this community.

For a long time we’ve sought that new widget we might offer to the market: the new candy bar everyone wants. It’s the old journey of:

  • find a need,
  • fulfil the need.

Our business models have been built around giving someone something they what, and making a margin on the way through. Sometimes our customers didn’t know that they had the need until we, or their peer group, pointed it out to them, but we were nevertheless, fulfilling a need.

Recent history has seen the more sophisticated version of this emerge in the last few decades:

Give them the razor and sell the razor blades{{2}}.

[[2]]Giving away the razor, selling the blades @ Interesting thing of the day[[2]]

which has the added advantage of fulfilling a reoccurring need. Companies such as HP have made good use of this, more-or-less giving away the printers while pricing printer ink so that it is one of the most expensive substances on the planet (per gram).

Since then, companies (both B2C and B2B) have been working hard to reach customers earlier and earlier in the buying process. Rather than simply responding, after a customer has identified a need, along with the rest of the pack, they want to engage the customer and help the customer shape their need in a way that provides the company with an advantage. A great example of this are the airlines who enable you to buy a short holiday somewhere warm rather than a return trip to some specified destination. The customer gets some help shaping their need (a holiday), while the company has the opportunity to shape the need is a way that prefers their products and services (a holiday somewhere that the airline flies to).

The most recent shift has been to flip this approach on its head. Rather than aligning themselves with the needs they fulfil, some companies are starting to align themselves with the problems they solve. Needs are, after all, just represent potential solutions to a problem.

Nike is an interesting case study. Back in the day Nike was a (marketing driven) sports shoe company. If you needed shoes, then they had shoes. Around 2006—2008 Nike started developing a range of complementary products – web sites, sensors integrated into clothing, etc. – and began positioning the company as providing excellence in running, rather than simply fulfilling a need. The company grew 27% in two years as a result.

Rolls Royce (who I’ve written about before{{3}}) are another good example, but business-to-business. They shifted from the need (jet engines) to the problem (moving the plane) with huge success.

[[3]]What I like about jet engines @ PEG[[3]]

While these companies still have product and service catalogues, what’s interesting is the diversity of their catalogues. Rather than structuring their catalogue around an internal capability (their ability to design and manufacture a shoe or jet engine), the focus is on their role in the market and the capabilities required to support this role.

As Andy said, they have an “in the market” model, rather than a “go to market” model.

I’ve already told you more than 125% of what I know

Bob Sutton has an interesting post on the limits of expertise: I have already told you more than 125% of what I know. As he points out:

I think that those of us who are alleged to have expertise in certain topics can easily fall into this trap as we try to be helpful to others, and rather than stopping and realizing that we are beyond our expertise, we just keep saying more and more about things we know less and less about.

Bob is talking about journalism, but there’s a similar problem with the business-IT relationship.  IT often forgets that subject matter experts don’t always have the answers needed; at least, not yet. Sometimes the subject matter experts need time to convert tacit knowledge —knowledge they know but which they can’t write down, or which they even struggle to explain — into a form which we can consume. Or they might even need time among themselves to create the knowledge together.

I’ve seen more than a few projects come unstuck because they didn’t understand that capturing knowledge is a journey you need to take with the business. The team continually returned to the business for more detail — asking for bullet pointed requirements or stories in a format that IT can easily consume — an approach which often fails, even if you have an embedded SME (à la Agile). (How many agile products have burnt out this customer representative with an overwhelming volume of detailed questions which the representative struggles to answer? Or transformation programmes which try to get the business to predict what they’ll need in a couple of years time, only to find out that they couldn’t predict that far into the future.) Sometimes the business just doesn’t know the answer, or can’t communicate it via our IT artefacts. They’ve already told us 125% of what they know.

We need to provide the business with a little help. This might involve iteration — showing them an early version to see “is what you meant”. It might mean deploying initial functionality into production quickly, and then building on the deployed solution. Or it might involve talking about the the things the business cares about — tasks, decisions, and points of variation, in the case of capturing a workflow — so that they can focus on the outcome they are driving too, leaving IT to worrying about how it might be implemented.

Today, we’re focused on leveraging the synergies between business and technology, rather than simply automating existing business processes. New technologies enable new business models which were not possible before. The business can see the opportunities but doesn’t know what’s possible. IT knows what’s possible, but can’t see the opportunities. Companies that understand this blur the line between business and IT, getting the two groups to work together, on the same side of the table, to identify and exploit these synergies. These companies — such as ZapposP&G and Vanguard — identify and exploit new revenue streams which are unavailable to their peers.

What’s interesting about these companies is that they seem to have realised that building out their IT estate is a journey that IT and business need to take together, rather than a simple matter of IT asking business what they want.

Peter Drucker’s seven sources of innovation

It seems that every time I find a web reference for Peter Drucker’s seven sources of innovation, the web site dies. So after yet-another site going the way of the dodo, I’ve decided to record them here, in this blog, so I at least have a stable thumbnail definition to point folk at.

Peter Drucker’s seven sources of innovation:

  1. The unexpected. The unexpected success, failure or outside event.
  2. The incongruity. The difference between reality as it actually is and reality as it is assumed to be or as it “ought to be.”
  3. Innovation based on process need.
  4. Changes in industry structure or market structure that catch everyone unawares.
  5. Demographics. Population changes
  6. Changes in perception, mood and meaning
  7. New knowledge, both scientific and nonscientific.

If you want more detail, then get the book Innovation and Entrepreneurship.

Innovation [2010-08-02]

Another week and another collection of interesting ideas from around the internet.

As always, thoughts and/or comments are greatly appreciated.