“A loser is someone (individual or group) who cannot build snowmobiles when facing uncertainty and unpredictable change; whereas a winner is someone (individual or group) who can build snowmobiles, and employ them in the appropriate fashion, when facing uncertainty and unpredictable change.”
Another week and another collection of interesting ideas from around the internet.
As always, thoughts and/or comments are greatly appreciated.
Pixar’s Brad Bird on Fostering Innovation [GIGAOM]
Steve Jobs hired him, says Bird, because after three successes (Toy Story, A Bug’s Life, and Toy Story 2) he was worried Pixar might struggle to stay innovative. Jobs told him: “The only thing we’re afraid of is complacency—feeling like we have it all figured out,” Bird quotes his boss as saying “… We want you to come shake things up.” Bird explains to McKinsey how he did it — and why, for “imagination-based companies to succeed in the long run, making money can’t be the focus.”
Open Source TRIZ [Open Source TRIZ] TRIZ is a theory and methodology for innovation invented in Russia in 1946. (Pronounced /ˈtriːz/, TRIZ is a Russian acronym: Теория решения изобретательских задач meaning “The theory of solving inventor’s problems” or “The theory of inventor’s problem solving”.) Open Source TRIZ is an interesting repository of TRIZ documentation and tools.
Asia and the elements of innovation [McKinsey & Company: What Matters]
Asia has strengths that promise to make it a leading center of technological innovation in the 21st century. These strengths are substantial, fundamental, and durable. At their base lie aspects of culture, on both a civilizational and generational time scale. Human capital and the capacity for mobilization build on these cultural advantages.
When does a good method become the only method? The one true approach to solving a problem; the approach which will bind them all. The last few decades has seen radical change in our social and business environments, while the practice of business seems to have changed relatively little since the birth of the corporation. The problem of running a business, the problem we work every day to solve, has changed so much that the best practice of yesterday has become an albatross. The methods and practices that have brought us to the current level of performance are also one of the larger impediments to achieving the next level. When did the yesterday’s doctrine become today’s dogma? And what can we do about it?
Our methodologies and practices have been carefully designed to help steer our leviathan ships of industry, tuning their performance to with five and three year plans. The newspapers of today, for example, hold a marked resemblance to the news papers of 100 years ago, structured as large content factories churning out the stories with some ads slapped in the page next to them.
The best practices evident in companies today represent the culmination of generations of effort in building, running and improving our businesses. The doctrine embodied in each industry in a huge, a immensely valuable body of knowledge, tuned to solving the problem of business as we know it.
a belief or set of beliefs held and taught by a church, political party, or other group : the doctrine of predestination.
• a stated principle of government policy, mainly in foreign or military affairs: the Monroe Doctrine.
ORIGIN late Middle English : from Old French, from Latin doctrina ‘teaching, learning,’ from doctor ‘teacher,’ from docere ‘teach.’
However, a number of fundamental changes have taken hold in recent years. The pace of business has increased markedly; what used to take years now takes months, or even weeks. The role of technology in business has changed as applications have become ubiquitous and commoditized. The assumptions which existing doctrine were developed under no longer hold.
Today, most (if not all) newspapers are watching their as revenue is eroded by the likes of Craigslist, who have used modern web technology to come up with a new take on the decades (if not centuries) old classified ad.
Let’s look at Craiglist. I’ve heard people estimate that they are doing close to $100mm in annual revenues at this point. Many say, “they could be doing so much more”. But the Craigslist profit equation is interesting. They apparently have less than 30 employees. That’s about $4mm/year in employee costs. Let’s assume that they spend another $6mm per year on hosting and bandwidth costs and other costs. So it’s very possible that Craigslist’s annual costs are around $10mm/year. Their value equation then is 10 x (100-10) = $900mm. That’s almost a billion dollars in value for a company with only 30 employees.
Craigslist has taken a fresh look at what it means to be in the business of classified ads, and used technology in a new way to help create business value, rather than restrict it to controlling costs and delivering process effencies; an approach Forrester have labeled Business-Technology.
The challenge is to acknowledge that the rules of business have changed, and modify our best practices to suit the new business environment because, as Albert Einstein pointed out “insanity is doing the same thing over and over again and expecting different results.” If we can’t change our best practices to suit, then our valuable doctrine has become worthless dogma.
a principle or set of principles laid down by an authority as incontrovertibly true: the Christian dogma of the Trinity | the rejection of political dogma.
ORIGIN mid 16th cent.: via late Latin from Greek dogma ‘opinion,’ from dokein ‘seem good, think.’
Enterprise architecture (EA) is prime example. As a doctrine, enterprise architecture has a proud history all the way back to John Zachman’s work in the 70s and the architecture framework which carries his name. EA has leveraged large, multi-year transformation programs to deliver huge operational effencies into the business. These programs have delivered a level of business performance unimaginable just a generation ago.
The pace of business has accelerated so much in recent years that the multiyear engagement model these transformations imply is no longer appropriate. What use is a five or three year plan in a world that changes every quarter? Transformation projects have been struggling recently. Some recent transformations edge across the line, at which point everyone moves onto the next project exhausted, and the promised benefits are neither identified or realized. Some transformations are simply declared a success after an appropriate effort has been applied, allowing the team to move on. A few explode, often quite publicly.
This approach made sense a decade or more ago, where IT was focused on delivering the next big IT asset into the enterprise. It’s application strategy, rather than technology strategy. However, the business and technology environment has changed radically recently since the emergence of the Internet as a public utility. The IT departments we’ve created as application factories have become an albatross for the business; making us incapable of engaging anything but a multiyear project worth tens of millions of dollars. They actively prevent the business from leveraging in innovative solutions or business opportunities. Even when there is a compelling reason to do so.
Most companies don’t need, nor can they can afford, a complete toolbox of enterprise architecture skills inside the business. A strict approach to the the doctrine will result in a larger EA team than the company can sustain. A smarter approach is to balance the demands and available resources of the company against the skill requirements and possible outcomes. We can tune our approach by aligning it with new techniques, tools and capabilities, or integrating elements from other doctrines—agile or business planning techniques, for example—to create a broader pallet of tools to solve our problem with. This might involve new engagement models. We can buy some skills while renting others. Some skills might be sustainable at a lower levels. It is also possible multi-skill, playing the role of both enterprise and solution architect. Similarly, leveraging software as a service (SaaS) solutions can also force changes in our engagement model, as a methodology suitable for scoping a three year and $50 million investment in on-premises CRM might not be appropriate for a SaaS solution which only requires 10% of the effort and investment as the on-premises solution.
Treating doctrine as prescriptive converts it into dogma. As John Boyd pointed out, we should assume that all doctrine is not right—that it’s incomplete or incorrect to some extent. You need to challenge all assumptions and look outside your own doctrine for new ideas.
Our own, personal resistance to change is the strongest thing holding us back. It seems that we learn something in our early to mid twenties, and then spend the rest of our career happily doing the same thing over and over again. We define ourselves in terms of what we did yesterday. If we create an environment where we define ourselves in terms of how we will help the organization evolve, rather than in terms of the assets we manage or doctrine we apply, then we can convert change from an enemy into an opportunity.
There is light at the end of the tunnel. For all the talk of the end of newspapers, some journalists are banding together to create new business models which can hold their own in a post-Craigslist world. Some old school journalists have taken a fresh look at what it means to be a newspaper. Young but growing strong and profitable, Politico’s news room is 100 strong and they have more people in the white house bureau than any other brand.
Journalists still matter. A lot. Especially the good ones.
The challenge is to focus on what really matters, get close to your customers and find what really drives your business, question all the common sense (which is neither common or sensible in many cases) in your industry’s doctrine, look into the doctrine of other industries to see what they are doing that you can use, and use technology to create a business which their more traditional competitors will find it impossible to compete against.
A nice analysis of possibly the most interesting ideation event in recent history.
Why innovation is crucial to our survival [Socialutions] Albert Einstein observed a world caught up in the madness of a World War and said: “The level of thinking that has created our problems will never prove sufficient to solve them.” He understood the value of innovation. And today we hear a lot about innovation, for some it’s a fad, for others a “buzz” word. To Einstein it was essential.
The Shift Index [Deloitte Centre for the Edge]
A world of near-constant disruption is emerging – one in which new ideas, technologies, and extreme events constantly and unexpectedly bear down on businesses. How are successful executives finding their way in this new world?
The Future of the Workplace [Monocle]
In the first edition of Monocle’s Design Dialogues, an intimate series of discussions on key design issues, they throw the spotlight on the future of the workplace.
How Twitter will change the way we live [Time]
Are tools like Twitter changing the dynamics of innovation? Traditionally we have used metrics to measure innovation which capture the inputs to the productization process; numbers like volume of patents generated or size of R&D spend. As Steven Johnson says toward the end of this article, “if you measure global innovation in terms of actual lifestyle-changing hit products and not just grad students, the U.S. has been lapping the field for the past 20 years”. What should we measure (as what’s measure is what gets done) if we want to innovate like Twitter?
The great promise of SOA was to deliver an IT estate which is more agile and cost effective than was possible with other, more conventional, approaches. By breaking our large problems into a set of much smaller ones, we would see more agility and a low total cost of ownership. The agility would come from the more flexible architecture provided by SOAs many moving parts. A lower cost of ownership would come from reuse of many of these moving parts. Many companies bought into this promise, and started major SOA transformation programs to “SOA enable their business”. Once the program of work was delivered they would have a shiny new flexible, and cost effective IT estate. The business would be thrilled, and the old tensions between business and IT would just melt away. More often than not the business wasn’t thrilled as the program failed to deliver the promised benefits.
The problem, it seems, is that we’re focused on creating cathedrals of technology. Cathedrals were the result of large bespoke development efforts. The plans often consisted of only a rough sketch on a scrap of paper, before a large number of skilled craftsmen were engaged. The craftsmen broke the problem into many small parts that were then laboriously assembled into the final structure, often adjusting the parts to fit in the process. While this process created a number of spectacular buildings, the journey from initial conception to completed build was long and challenging.
The lack of engineering pragmatism frequently resulted in cathedrals collapsing before they were finished, often multiple times. The reason we know that a flying buttress worked was because it hadn’t failed, yet. People died when a structure collapsed, and there was no way of telling if the latest version of the structure was about to collapse. The lengthy development process often lasted generations, passing through the stewardship of multiple architects with no clear end in sight. Many cathedrals, such as the one in New York, are still considered unfinished.
A lot of SOA projects give off a strong smell of cathedral. They are being constantly re-architected—while still in development—to cope with the latest business exception or demand. When they’re introduced to the hard reality of supporting solutions bits of them collapse and need to be rebuilt to support our new (and improved) understand of what will be demanded of them. And, finally, many of them are declared “finished” even though they are never fully baked, just so we can close that chapter in our company’s history and move onto the next problem.
Modern approaches to building construction take a different approach. A high level plan is created to capture the overall design for the building. The design is then broken into a small number of components, with the intention for using bespoke craftsmen for the fine details that will make the building different, while leveraging large, commoditized, pre-fabricated components for the supporting structures that form the majority of the building. Construction follows a clear timetable, with each component—from the largest pre-fabricated panel through to the smallest detail—integrated into the end-to-end solution as it is delivered. Complexity and detail were added only where needed, with cost effective commoditized approaches minimizing complexity elsewhere. A clear focus on the end goal is maintained throughout the effort, while clear work practices focused on delivering to the deadline ensure that the process was carried out with a minimum of fuss (and no loss of life).
The problem, it seems, is that we’re confusing agility with flexibility. The business is asking for agility; the world is changing faster than ever and the business needs to be in a position to react to these changes. Agility, or so our thinking goes, requires flexibility, so to provide a lot of agility we need to provide a lot of flexibility. Very soon we find ourselves breaking the IT estate (via our favorite domain model) into a large number of small services. These small parts will provide a huge amount of flexibility, therefore problem solved!
This misses the point. Atomizing the business in this way creates overhead, and the overhead soon swamps any benefit. The effort to define all these services is huge. Add a governance process—since we need governance to manage all the complexity we created—and we just amplify the effect of this overhead. Our technically pure approach to flexibly is creating too much complexity, and our approach to managing this complexity is just making the problem worst.
We need to think more like the architect of the modern prefabricated building. Have a clear understanding of how the business will use our building. Leverage prefabricated components (applications or SaaS) where appropriate; applications are still the most efficient means of delivering large, undifferentiated slabs of functionality. And add complexity only in those differentiating areas where it is justified, providing flexibility only where the business needs. In the end, creating good software is about keeping it simple. If it’s simple, it gets done quickly and can be maintained more readily.
Above all, favor architectural pragmatism over architectural purity. The point of the architecture is to support the business, not to be an object of beauty.
Horizontal Innovation Networks: By and for Users [Eric von Hippel]
Innovation development, production, distribution and consumption networks can be built up horizontally—with actors consisting only of innovation users (more precisely, “user/self-manufacturers”). Some open source software projects are examples of such networks, and examples can be found in the case of physical products as well. In this article, we discuss three conditions under which user innovation networks can function entirely independently of manufacturers. We then explore related empirical evidence, and conclude that conditions favorable to horizontal user innovation networks are often present in the economy.
Can China beat the U.S.A. at customer service? Not quite yet according to The Economist, but they do seem to be getting there. If Chinese businesses can start to out perform the West in front office processes then China would start to be the front line seller, not the back office producer. And China has a massive, and rapidly maturing, domestic market to experiment on as it tries to get these processes right.
The Economist’s article provides us with a real sense of the shift in global business that that the current financial crises only seems to be accelerating. I’m a big believer that there’s nothing particularly special about the people in any particular country. I’ve been lucky enough to work on most of the continents and with a diverse enough range of nationalities to understand that we’re all equally intelligent, creative and innovative given half a chance. If we’re all as smart as each other then ultimately success (or not) of a country will come down to the size of its talent pool (population) and the willingness of its businesses to invest. China and India, with their massive populations, and drive to modernize are well positioned to tip the balance in their favor, if they can sort their domestic markets out. This appears to be happening.
Our current assumptions seem to be that the East (China and India) will manufacture products designed in the West (the U.S.A. and Europe) and which are sold to western customers. Most of the value is generated and captured in the West. This makes sense at the moment as the West (and the US in particular) is the largest, homogenous and rich market in the world. Western companies have the advantage of a large domestic market, and overseas companies all target the West as it offers the largest potential to grow their businesses.
However, China’s move into the front office has the potential to flip the entire balance. Western companies could be manufacturing Chinese designs for western domestic markets, with the cash generated in the West and value captured in the East. With its huge internal population Chinese business will have access to the talent it needs to invent and design new products and services. It has have a large domestic population to grow a business and tune its offering. As costs rise and the advantages of labour arbitrage are eroded, manufacturing will slowly migrate from East to West to be close to the client where it avoids currency risk (similar to how various Japanese car companies established factories in the American south).
The question on all of our lips, though, is “How does this effect me?”