Innovation Excellence Weekly - Issue 36 by Braden Kelley

June 20, 2013

Issue 36 – June 14, 2013

Innovators Challenge Orthodoxies: Elon Musk ......................................... Rowan Gibson

A Brilliantly Simple Way to Boost our Creativity …….……..……….... Jerome Provensal

Phone as Bank: Are You Ready for Disruptive Innovation? ……......…… Holly G Green

4 Ways Technology Is Transforming Business……………..…………...…...... Greg Satell

Microsoft ReOrg – Crafty or Confusing? .…………………..…...…...……… Adam Hartung

(Mis)understanding Technology… ………………………………..…………..…. Greg Satell

The Design Manager Comprehensive Role in Innovation Process ……...…. Nicolas Bry

Innovation is All Relative …………………………………………......…….. Kevin McFarthing

Using Books as Tools ……………………………………………….…….…...….. Julie Anixter

10.

Innovative Feelings ………………………………..……..…...…..…..…. Jeffrey Baumgartner

Your hosts, Braden Kelley, Julie Anixter and Rowan Gibson, are innovation writers, speakers and strategic advisors to many of the world’s leading companies.

“Our mission is to help you achieve innovation excellence inside your own organization by making innovation resources, answers, and best practices accessible for the greater good.”

Cover Image credit: Mom Daughter Style

Innovators Challenge Orthodoxies: Elon Musk Posted on June 6, 2013 by Rowan Gibson

Great innovators tend to be contrarians. They have an almost innate tendency to challenge industry orthodoxies, upend conventional wisdom, and turn the seemingly “impossible” into the possible. For me, one of the greatest modern examples of this is Elon Musk – of Paypal, SpaceX, and Tesla fame. If you didn’t catch Elon’s interview at the recent All Things Digital® conference, it’s a must-see video for anyone who claims to take innovation seriously. You can view the full video here. Let’s go back in time to the Wild Wild Web of the mid- to late-nineties, when it simply wasn’t safe or easy to move money around online. Musk refused to accept that it had to be so, or that only giant financial services companies could come up with a solution. So in March 1999 he decided to start his own Internet financial services company, called X.com, which quickly became one of the Web’s leading financial institutions. One year later, in March 2000, X.com bought another Internet startup called Confinity and formed PayPal. In 2002, eBay bought PayPal for $1.5 billion. Today, Paypal is the leading global online payment transfer provider.

So what did Elon Musk do next? Sit back and enjoy his millions? Nope. He set out to take on some even bigger, and arguably much more important innovation challenges. Indeed, as Chris Anderson put it last year in a Wired magazine interview, “he decided to disrupt the most difficult-to-master industries in the world”. The first of these challenges was reinventing space rocket technology – a field that was assumed to be the exclusive territory of large government-funded organizations like NASA – with the audacious goal of reducing the cost of rocket launches by a factor of 10. Another challenge was reinvigorating space exploration itself (NASA’s efforts were being choked by continuous budget cuts), with the even more audacious goal of launching a privately-funded manned mission to Mars within 10 to 20 years. In June 2002, Musk founded SpaceX with $100 million of his early fortune, and set out to redesign space rockets and space exploration from scratch, challenging a plethora of orthodoxies and assumptions that had been around since the 1960s.

His initial and most fundamental question was “Why do space rockets have to be so expensive?” Musk took a look at the actual material cost of a space rocket – the aluminum alloys, titanium, copper, and carbon fiber – and found that it represented only about 2 percent of the typical price of the rocket itself. So, having decided that this was a crazy and unacceptable ratio, he set out to design and build his own space rockets (!) at a fraction of the normal cost. In the process, Musk identified all kinds of absurdities in the aerospace market.

He found that it was largely bogged down by bureaucracy, and locked into legacy technologies from the past, which was keeping prices unnecessarily high. By challenging these absurdities, Musk was able to figure out ways of doing things that he calculates could save US taxpayers at least a billion dollars a year. Over the last decade, Musk’s SpaceX team has designed, built and launched a whole series of next-generation rockets that have literally changed industry economics. In 2008, NASA awarded SpaceX a $1.6 billion contract for 12 cargo flights to and from the International Space Station, effectively replacing the Space Shuttle. And on May 25th, 2012, SpaceX made history when its Dragon spacecraft became the first commercial vehicle in history to successfully dock with the International Space Station. Another important question Musk asked was, “Why can’t space rockets be reusable?”. Most people think the space shuttle was reusable, but in fact the main tank was thrown away after every flight, and the refurbishment of other parts before each new mission was so expensive that the shuttle actually cost four times more than an expendable rocket with its sequentially ejected stages.

Musk’s argument is that full and rapid reusability is “the fundamental thing that’s necessary for humanity to become a space-faring civilization. America would never have been colonized if ships weren’t reusable.” So SpaceX has made this another primary goal. In 2010, it became the first private company to successfully launch a spacecraft into Earth’s orbit and then bring it back. And now Musk is testing his incredibly ambitious “Grasshopper Project”, which is a huge Falcon 9 rocket that can take off, go into orbit, then turn around and return to the launch site, landing vertically, like something from a 1950s Sci-fi movie. All of this has been just a precursor to Musk’s ultimate goal of colonizing space. SpaceX’s first manned flights – under a NASA award – are expected in 2015. And, after radically reducing the cost of space flight and making rockets reusable, Musk’s original question “Why can’t we send people to Mars?” (the question that drove him to found SpaceX in the first place), doesn’t seem so ridiculous after all. Oh and, by the way, in his spare time Elon Musk is also reinventing the way we drive. In 2003, he co-founded Tesla Motors to create affordable mass market all-electric vehicles for mainstream consumers. Ten years later, his Tesla Model S is the third best-selling luxury car in California (the biggest economy in America and the 12th largest in the world), after Mercedes and BMW, with a 12.7% share of the market.

The Model S has received the highest Consumer Reports score of any car since 2007, and has picked up numerous awards. Tesla has understandably become a favorite on the NYSE, with the stock up 185% this year (2013), and 72% over the last month alone. Shares are up 447% since the company went public in late June 2010. In fact, Tesla’s market

capitalization has risen by more than $4 billion since May 8, hitting a recent high of $10.7 billion, putting SpaceX on a par (in terms of market cap) with Staples, Tiffany and Whirlpool. The company has recently raised a billion dollars of new cash, and has paid off its half-a-billion dollar federal loan (part of Obama’s clean energy program) almost a decade early. Not bad for a venture that everyone in the automobile industry predicted would be a disaster. Again, Musk’s whole success story is based on his propensity for challenging industry orthodoxies. In the “All Things Digital” interview mentioned earlier, he talks about two false assumptions that have dominated the thinking of Detroit’s senior executives for decades. First, “that you couldn’t make a compelling electric car – one that was aesthetically appealing, long-range, and high performance.” And, second, “that even if you did all those things, people would still not buy it because it was electric.” There also were other deeply-held and widely-shared beliefs that had put the brakes on the electric car opportunity for years (following GM’S failed foray into this space in the 1990s with the EV-1). Musk had been told, “You’ll never be able to bring it to market, you’ll never be able to produce it in volumes, and you’ll never be able to make a profit.” But, although it’s early days and the jury’s still out, it would seem that these industry “experts” may all have been completely wrong. In addition to transforming space travel and automobiles, Elon Musk is transforming energy with SolarCity, a startup that leases solar-power systems to homeowners as well as educational, commercial and governmental users. And he has also hinted at another breakthrough project he has been working on in secret, called Hyperloop. He admits that he was irritated when he found out about the Californian government’s proposal to invest $60 billion in a bullet train project from LA to San Francisco, because, as he argues, it would be “the slowest bullet train in the world at the highest cost per mile”. As an alternative, Musk is proposing a hypothetical mode of high-speed transportation that he describes as a “cross between a Concorde and a railgun and an air hockey table”. He estimates that the cost of his SF-LA Hyperloop would be about $6 billion, one tenth as costly as the proposed high speed rail serving those cities. “We have planes, trains, automobiles and boats,” Musk says. “What if there was a fifth mode?”. And here is his own tantalizing description of this “fifth mode of transportation”: “How would you like something that can never crash, is immune to weather, it goes 3 or 4 times faster than the bullet train… it goes an average speed of twice what an aircraft would do. You would go from downtown LA to downtown San Francisco in under 30 minutes. It would cost you much less than an air ticket or than any other mode of transport. I think we could actually make it self-powering if you put solar panels on it, you could generate more power than you would consume in the system. There’s a way to store the power so it would run 24/7 without using batteries.” Nobody knows exactly what Musk has in mind. But his track record as an innovator affords him enough credibility to be taken seriously, even if he’s talking about “a ground-based Concorde” or a kind of “railgun” without rails, that can travel at speeds of more than 685 mph (1,102 km/h). Let’s face it, with ideas like these, anyone but Elon Musk would be discounted as a nutcase. But it’s exactly by delivering on his big, radical ideas (remind anyone of Steve Jobs?) that he

has become such an innovation icon. This week, Rolfe Winkler of The Wall Street Journal wrote, “Each time Mr. Musk delivers a better, less-expensive electric car or launches another rocket successfully, he proves his doubters wrong”. Jon Favreau, director of the first two Iron Man movies, famously modeled the on-screen character of Tony Stark, the eccentric billionaire inventor, on Musk. And in an article for Time magazine’s “100 Most Influential People in the World”, Favreau described Musk as “a Renaissance man in an era that needs them.” That’s as good a description as any for this remarkable innovator. INVITATION FROM THE AUTHOR: “Challenging Orthodoxies” is one of The Four Lenses of Innovation I describe in my bestselling book Innovation to the Core (Harvard Business Press) – the other three lenses are “Harnessing Trends”, “Leveraging Resources”, and “Understanding Needs”. I’m currently collecting other compelling examples of “Challenging Orthodoxies” from all kinds of companies, industries and individual innovators. If you have a brief case, example or story you want to share, either from your own experience, reading or research, or from your own company, I’d love to hear from you either by email at rg@rowangibson.com or as a comment on this article. And of course I’ll give you a big, personal acknowledgment in my upcoming book, which is published next year. So, what are the one or two best innovation examples of “Challenging Orthodoxies” you can think of? Email me or simply comment on this article today.

image credits: allthingsd.com; teslamotors.com

Rowan Gibson, co-founder of Innovationexcellence.com, is one of today’s foremost thought leaders on business innovation. He is co-author of the bestseller Innovation to the Core and a much in-demand public speaker in 60 countries around the world. You can follow him on Twitter @RowanGibson

A Brilliantly Simple Way to Boost our Creativity Posted on June 8, 2013 by Jerome Provensal

Psychological Distance In this fascinating Scientific American article, the authors (Oren Shapira and Nira Liberman) tell us that creativity is not bound by the sole innate characteristics of an individual and can in fact be changed based on situation and context. Consider this experiment: 2 groups of participants from the Indiana University were asked to list as many different modes of transportation as possible. The first group was told that the task had been developed by Indiana University students studying in Greece and the second group was told instead that the task had been developed by Indiana University students studying in Indiana. The first group was able to generate more numerous and original modes of transportation that the second group.

How can such a minute detail have any significant influence on creativity?! This phenomenon is referred as “Construal Level Theory (CLT) of Psychological Distance”, i.e. anything that we do not experience as occurring now and here. Attempting to take another person’s perspective or by thinking of a question as if it were unreal and unlikely, also fall in to that category of “psychological distant”. According to CLT, psychological distance affects how we mentally represent things, where distant things are represented in an abstract way. Once classified as abstract (vs. concrete), it seems that the mind get an extra boost of creativity in solving or manipulating those abstract things. Studies have also shown that projecting an event into the remote future can enhance creativity. In a series of experiments examining how temporal distance affects performance of insight and creativity tasks, participants were asked to imagine their lives a year later (distant future) or the next day (near future), and then to imagine working on a task on that day in the future. Once again, participants who imagined a distant future were more creative and insightful. Finally, evidence shows that study participants were more successful at solving problems when they believe that they were unlikely to encounter the full task.

These findings have interesting practical implications. One can take simple steps to increase creativity by: 

travelling (in person or just thinking about it) to faraway places,



envisioning distant future and



considering improbable alternatives to reality.

So, next time you are stuck on a problem that requires creativity, just picture yourself in a faraway place, in a far future, dreaming up of unlikely scenarios. Now, if you do this in a shower, there will be no stopping you! Questions/Comments? Use the comment box below.

image credit: http://bit.ly/Wj349m

Jérôme Provensal is Director of Software Development for a leading FinTech company and blogs from LightBulbBites. He is a Software Engineer by training and passion, with a MS in Computer Science and IT Systems from Université Pierre et Marie Curie. Born, raised and educated in France, he’s resided in the US (Los Angeles) for 20+ years.

Phone as Bank: Are You Ready for Disruptive Innovation? Posted on June 7, 2013 by Holly G Green

Does your bank fit inside your cell phone? If not, it soon will. And if today’s banks don’t come to terms with this fact very soon (as in starting yesterday), they may no longer exist in 10 or even five years. How’s that for disruptive innovation? I just finished reading Bank 3.0 –Why Banking Is No Longer Somewhere You Go But What You Do by Brett King. If this book doesn’t convince you that the world is changing faster that most of us can imagine, nothing will! It also puts to rest a common thought bubble that many business leaders are desperately clinging to: new technologies may shake things up a bit, but they won’t disrupt my industry. In his well-researched book, King asserts that the mobile phone (in conjunction with the Internet) is causing a shift in bank practices and distribution models like nothing that has come before. Very soon, this will result in a highly mobile, portable banking world that is light years away from the traditional model of delivering goods and services through branch offices. Banks that fail to adapt to this new model will be replaced by upstarts (i.e., industry outsiders) that use new technologies to completely redefine what it means to bank. The most fundamental change is that instead of heading to the nearest branch to conduct our banking needs, we will literally carry our bank with us wherever we go. The institutions that succeed in this radically new banking world will be those that use digital technologies to facilitate seamless mobile financial transactions whenever and wherever the customer wants. The implications, not just to bankers but to all types of financial institutions, are staggering! Imagine that you’ve spent the last quarter of a century developing and refining a business model that revolves around building large numbers of physical branches. Now, your customer is saying, “I don’t want to come to your branches anymore. I want to bank wherever I am. If you don’t offer that kind of mobility, I’ll take my business to someone who will.” This not only demands that banks change virtually everything they do, it also leads the playing field wide open for new players that aren’t encumbered with billion-dollar investments in branch assets and entrenched ways of thinking. How do you prepare for change of this magnitude in your industry? Here are a few suggestions as you head down this uncertain but necessary path: Get out of denial. Disruptive change is here to stay. If it hasn’t hit your industry yet, it’s only a matter of time. So pull your head out of the sand and start thinking about how your industry will change and when.

Do an industry status check. How much has your industry changed in the last five years? 10? 25? Industries with the least amount of change are the ripest for disruption. Examine your assumptions. The more you’re absolutely, positively sure you know what your customers want, they harder it is to let go of old ways of thinking. When was the last time you checked your thought bubbles against real, quantifiable data? Expand your idea of competitive threats. Stop focusing just on existing competition and start looking at where you might be vulnerable to threats outside your industry. For example, VISA and Mastercard require a huge, global infrastructure for their credit card transactions. Very soon, however, all that will be required to facilitate payments is a cell phone and the appropriate apps. Goodbye barriers to entry; hello wide-open playing field. Stop resisting social media. It took five to 10 years for companies to really figure out how to do business on the Internet. We’re now reaching that point with social media. Stop seeing it as just a tool for blasting marketing messages to your target markets. Start exploring ways to use it to facilitate delivery of your products and services. Expand your data sources. Even when you expect disruptive change, it can be hard to see where it will come from and what it will look like. Make it a habit to gather data from outside your industry. Look at how other industries are getting blown up and see how those lessons might apply to yours. Ask yourself, what new technologies could remove existing barriers to entry in our industry? Who might jump in once they are gone? Personally, I’m looking forward to not having to go to a bank anymore. Which begs two very important questions. What are your customers looking forward to not having to do anymore? And who will give it to them — you or someone else? Call to action: Read Bank 3.0 and apply the principles to your industry. image credit: money.howstuffworks.com

Holly is the CEO of THE HUMAN FACTOR, Inc. (www.TheHumanFactor.biz) and is a highly sought after and acclaimed speaker, business consultant, and author. Her unique approach to creating strategic agility, helping others go slow to go fast, will change your thinking.

4 Ways Technology Is Transforming Business Posted on June 6, 2013 by Greg Satell

When Clayton Christensen was a newly minted professor at Harvard Business School and began his famous study of why companies fail, he took an unusual approach. He wanted to look not just at any companies, but successful ones. The kind whose stocks were once high flyers and whose CEO’s graced the covers of top business magazines. Not the losers, but the winners who stumbled and fell. What he found was startling. While he expected to see once great companies who lost their way, what he found was firms that followed all of the best practices taught at business schools like his. In other words, he found that technology shifts can radically change business principles. Today, as the technology continues to evolve, we need to take these four shifts into account.

1. We Think in Linear Terms, but Technology Moves at an Exponential Pace Business schools teach us to be logical and methodical, but the truth is that we’re not as rational as we’d like to think. Executives need to make thousands of decisions and speed is important, so we take short cuts, relying on rules of thumb to fill in the gaps in our data. Therefore, we often extrapolate, using personal experience to make common sense judgments. The problem is that today’s business environment is fraught with S-curves and non-linear digital laws, not the step-by-step advance that we experience on a journey in the physical world. What’s driving the change is the increasing informational content of our products and services. We used to operate in an economy of atoms, in which value was created by transforming matter and energy. Nowadays, value is often created by design through informationally driven technologies such as CAD software, 3-D printing and genomics. Technology pioneer Ray Kurzweil predicts that in the future, “all technologies will essentially become information technologies, including energy.” So exponential rates of progress will increasingly become the norm.

2. Scale Advantages Have Diminished Banks used to be situated in large, ornate buildings that radiated size and power. The idea was that scale meant safety. Doing business with a big company meant that you could be sure that they would be around in the future and could stand by their promises. In those days, no one ever got fired for buying IBM. That was then, this is now. Of the 500 companies on Fortune’s original list of the largest companies, only 71 were still there as of 2008 . Their scale provided little insulation from market forces. Meanwhile, companies like Google, Facebook and Instagram spring up out of nowhere, becoming billion dollar companies overnight. That’s the essence of the new semantic economy. Upstarts can get access to resources that used to be available only to large ones. Whether it’s infrastructure in the cloud, outsourced manufacturing or capital from angels, VC’s and crowdfunding, very few industries still have significant barriers to entry. About the only real advantage that incumbents have these days is the ability to hire lobbyists through trade associations and that is often more a sign of weakness than of strength.

3. Business Models No Longer Last In the industrial age, a company’s business model didn’t change much. The way a firm would create, deliver and capture value could stay fairly constant for generations. The practice of management was mostly focused on execution. If you could move men and material efficiently, buy for a dollar and sell for two, you’d be successful, sometimes enormously so. As Saul Kaplan rightly points out in his excellent book, The Business Model Innovation Factory , that’s no longer true. We have come to expect a number of upheavals in any given industry during the course of a career or even within a decade. With scale advantages disappearing, no one is immune. We all have to adapt.

Whatâ&#x20AC;&#x2122;s more, the process is accelerating. As technological cycles compress and planning cycles struggle to keep up, we need to experiment more and plan less. This is creating a strategic shift where strategy becomes more emergent, collaborative and Bayesian.

4. The Lunatics Run The Asylum Way back in 1969, while hippies were making their pilgrimage to Woodstock and Niel Armstrong was preparing for his moonwalk, Peter Drucker was predicting the oncoming of a new age, which he called the knowledge economy, where managers would have to supervise subordinates who had expertise that they themselves lacked. One of the key ramifications that he foresaw was that we have to treat almost everyone as if they were a volunteer. No amount of monitoring and auditing can suffice. Control becomes a dangerous illusion in a knowledge economy. The result is weâ&#x20AC;&#x2122;re at the mercy of the lowest common denominator. No one cares what the CEO says in the annual report if the front line people arenâ&#x20AC;&#x2122;t performing well and making good decisions. Business moves too fast and is far too complex for rules and regulations to drive competent performance. The lunatics run the asylum, the best that managers can do is help them run it right.

The Ramifications of an Information Economy and Accelerating Returns While there is no lack of discussion about the digital age, I’m not sure that we’ve fully accepted the consequences of the transition from atoms to bits. It’s not just that technology is moving faster, the rate of change is actually accelerating and that alters the logic by which we need to operate. Our intuition and experience lead us to assume a much slower pace. Further, as the informational content of products and services increases, the economics change. While material and energy costs become less important, the information component is becoming exponentially more efficient. We’ve seen this in computer hardware and software, but now we’re seeing it in life sciences and even manufacturing. Everywhere you look, efficiency is being automated. From robots in factories to pattern recognition software that automates analytical tasks, machine capabilities are replacing human ones in every area except one: our ability to interact with each other. That’s the essence of the new passion economy. In a fully automated age, the only truly valuable asset will be the human spirit. image credit: hbr.com

Greg Satell is an internationally recognized authority on Digital Strategy and Innovation. He consults and speaks in the areas of digital innovation, innovation management, digital marketing and publishing, as well as offshore web and app development. His blog is Digital Tonto and you can follow him on Twitter.

Microsoft ReOrg – Crafty or Confusing? Posted on June 8, 2013 by Adam Hartung

Microsoft CEO Steve Ballmer appears to be planning a major reorganization. The apparent objective is to help the company move toward becoming a “devices and services company” as presented in the company’s annual shareholder letter last October. But, the question for investors is whether this is a crafty move that will help Microsoft launch renewed profitable growth, or is it leadership further confusing customers and analysts while leaving Microsoft languishing in stalled markets? After all, the shares are up some 31% the last 6 months and it is a good time to decide if an investor should buy, hold or sell. There are a lot of things not going well for Microsoft right now. Everyone knows PC sales have started dropping. IDC recently lowered its forecast for 2013 from a decline of 1.3% to negative 7.8%. The mobile market is already larger than PC sales, and IDC now expects tablet sales (excluding smartphones) will surpass PCs in 2015. Because the PC is Microsoft’s “core” market – producing almost all the company’s profitability – declining sales are not a good thing. Microsoft hoped Windows 8 would reverse the trend. That has not happened. Unfortunately, ever since being launched Windows 8 has underperformed the horrific sales of Vista. Eight months into the new product it is selling at about half the rate Vista did back in 2007 – which was the worst launch in company history. Win8 still has fewer users than Vista, and at 4% share 1/10th the share of market leaders Windows 7 and XP. Microsoft is launching an update to Windows 8, called Windows 8.1 or “blue.” But rather than offering a slew of new features to please an admiring audience the release looks more like an early “fix” of things users simply don’t like, such as bringing back the old “start” button. Reviewers aren’t talking about how exciting the update is, but rather wondering if these admissions of poor initial design will slow conversion to tablets. And tablets are still the market where Microsoft isn’t – even if it did pioneer the product years before the iPad. Bloomberg reported that Microsoft has been forced to cut the price of RT. So far historical partners such as HP and HTC have shunned Windows tablets, leaving Acer the lone company putting out Windows a mini-tab, and Dell (itself struggling with its efforts to go private) the only company declaring a commitment to future products.

And whether it’s too late for mobile Windows is very much a real question. At the last shareholder meeting Nokia’s investors cried loud and hard for management to abandon its commitment to Microsoft in favor of returning to old operating systems or moving forward with Android. This many years into the game, and with the Google and Apple ecosystems so far in the lead, Microsoft needed a game changer if it was to grab substantial share. But Win 8 has not proven to be a game changer. In an effort to develop its own e-reader market Microsoft dumped some $300million into Barnes & Noble’s Nook last year. But the e-reader market is fast disappearing as it is overtaken by more general-purpose tablets such as the Kindle Fire. Yet, Microsoft appears to be pushing good money after bad by upping its investment by another $1B to buy the rest of Nook, apparently hoping to obtain enough content to keep the market alive when Barnes & Noble goes the way of Borders. But chasing content this late, behind Amazon, Apple and Google, is going to be much more costly than $1B – and an even lower probability than winning in hardware or software. Then there’s the new Microsoft Office. In late May Microsoft leadership hoped investors would be charmed to hear that 1M $99 subscriptions had been sold in 3.5 months. However, that was to an installed base of hundreds of millions of PCs – a less than thrilling adoption rate for such a widely used product. Companies that reached 1M subscribers from a standing (no installed base) start include Instagram in 2.5 months, Spotify in 5 months, Dropbox in 7 months and Facebook (which pioneered an entire new marketplace in Social) in only 10 months. One could have easily expected a much better launch for a product already so widely used, and offered at about a third the price of previous licenses. A new xBox was launched on May 21st. Unfortunately, like all digital markets gaming is moving increasingly mobile, and consoles show all the signs of going the way of desktop computers. Microsoft hopes xBox can become the hub of the family room, but we’re now in a market where a quarter of homes lead by people under 50 don’t really use “the family room” any longer. xBox might have had a future as an enterprise networking hub, but so far Kinnect has not even been marketed as a tool for business, and it has not yet incorporated the full network functionality (such as Skype) necessary to succeed at creating this new market against competitors like Cisco. Thankfully, after more than a decade losing money, xBox reached break-even recently. However, margins are only 15%, compared to historical Microsoft margins of 60% in “core” products. It would take a major growth in gaming, plus a big market share gain, for Microsoft to hope to replace lost PC profits with xBox sales. Microsoft has alluded to xBox being the next iTunes, but lacking mobility, or any other game changer, it is very hard to see how that claim holds water. The Microsoft re-org has highlighted 3 new divisions focused on servers and tools, Skype/Lync and xBox. What is to happen with the business which has driven three decades of Microsoft growth – operating systems and office software –

is, well, unclear. How upping the focus on these three businesses, so late in the market cycle, and with such low profitability will re-invigorate Microsoft’s value is, well, unclear. In fact, given how Microsoft has historically made money it is wholly unclear what being a “devices and services” company means. And this re-organization does nothing to make it clear. My past columns on Microsoft have led some commenters to call me a “Microsoft hater.” That is not true. More apt would be to say I am a Microsoft bear. Its historical core market is shrinking, and Microsoft’s leadership invested far too much developing new products for that market in hopes the decline would be delayed – which did not work. By trying to defend and extend the PC world Microsoft’s leaders chose to ignore the growing mobile market (smartphones and tablets) until far too late – and with products which were not game changers. Although Microsoft’s leaders invested heavily in acquisitions and other markets (Skype, Nook, xBox recently) those very large investments came far too late, and did little to change markets in Microsoft’s favor. None of these have created much excitement, and recently Rick Sherland at Nomura securities came out with a prediction that Microsoft might well sell the xBox division (a call I made in this column back in January.) As consumers, suppliers and investors we like the idea of a near-monopoly. It gives us comfort to believe we can trust in a market leader to bring out new products upon which we can rely – and which will continue to make long-term profits. But, good as this feels, it has rarely been successful. Markets shift, and historical leaders fall as new competitors emerge; largely because the old leadership continues investing in what they know rather than shifting investments early into new markets. This Microsoft reorganization appears to be rearranging the chairs on the Titanic. The mobile iceberg has slashed a huge gash in Microsoft’s PC hull. Leadership keeps playing familiar songs, but the boat cannot float without those historical PC profits. Investors would be smart to flee in the lifeboat of recent share price gains. image credit: cnet

Adam Hartung, author of Create Marketplace Disruption, is a Faculty and Board member of the Lake Forest Graduate School of Management, Managing Partner of Spark Partners, and writes for Forbes and the Journal for Innovation Science.

(Mis)understanding Technology… Posted on June 9, 2013 by Greg Satell

…Why 140 Characters is Better than a Flying Car Progress is a funny thing. As Bruce Gibney noted in the Founders Fund Manifesto, we were expecting to have flying cars by now, but ended up with 140 characters instead. What gives? And Mr. Gibney isn’t the only one to question progress. From Nassim Taleb to Evgeny Morozov, a fair number of highly intelligent and very well informed people are arguing that, for all of the hubbub, what we consider to be technological progress isn’t really all that meaningful.

I believe that much of the criticism stems from a misunderstanding about the function and purpose of technology.

While skeptics are right to point out that the basic functionality of many inventions hasn’t improved for decades (or even centuries), our goal for the future should not be to merely improve upon the past, but to advance beyond it.

The Great Debate Probably the strongest critic of technological progress is Robert Gordon, who published an influential paper on the subject. His argument is twofold. Firstly, he contends that we are facing six headwinds (e.g. aging population, debt, pollution, etc.) that reduce productivity growth. Secondly, he points to indications that the progress of the industrial age was driven by one-time events, such as the discovery of the steam engine, the internal combustion engine and electricity, while the productivity improvements of the computer age have been short lived and won’t be able to overcome the six headwinds he identified. On the other side is Erik Brynjolfsson who argues in his book (along with Andrew McAfee) that information technology provides accelerating returns which are just beginning to filter into the physical world. In his view, the new industrial revolution, driven by robots and algorithms, has just begun.

(Brynjolfsson and Gordon presented and then debated their arguments at TED 2013. I’ve included the videos at the end of this post). With all due respect to both men, I feel that their arguments fall short in that they focus on dueling statistics and largely miss the underlying societal change that technology brings about. As longtime technology observer Rishad Tobaccowala often says, the future does not fit in the containers of the past.

(Mis)Understanding Technology At the heart of the confusion is a misunderstanding of what drives technology. Both Gordon and Brynjolfsson focus on the things that we build. However, as Martin Heidegger argued in his landmark 1950 essay, we don’t build technology as much as we uncover it and put it to use in a particular context (a process he refers to as “enframing”). He gives the example of a hydroelectric dam:

The hydroelectric plant is set into the current of the Rhine. It sets the Rhine to supplying its hydraulic pressure, which then sets the turbines turning. This turning sets those machines in motion whose thrust sets going the electric current for which the long-distance power station and its network of cables are set up to dispatch electricity. In the context of the interlocking processes pertaining to the orderly disposition of electrical energy, even the Rhine itself appears to be something at our command. So the dam itself isn’t technology, but its agent, much like Facebook and Twitter aren’t social networks, but tools for uncovering particular truths about human relationships that have always existed. It is through unlocking those forces that we advance. Therefore, to compare computers with steam engines and electricity desperately misses the point. It is not the tools of technology that we should be focusing on, but the opportunities that we are presented with when natural forces are revealed and put to good use.

Building Dwelling Thinking Everybody is deeply affected by the particular context in which they live and work. Gordon, for example, is a 72 year-old economist who dedicated his career to the study of broad macroeconomic trends, while Brynjolfsson is a 51 year-old economist who works alongside the technological wizards at MIT.

Heidegger, was a German who was deeply affected by World War II. In the late 40â&#x20AC;&#x2122;s and early 50â&#x20AC;&#x2122;s Germany was in shambles; physically, economically and in spirit. It was during this period that he wrote, Building Dwelling Thinking, in which he argued that rebuilding Germany would entail much more than the mere construction of edifices.

However hard and bitter, however hampering and threatening the lack of houses remains, the real plight of dwelling does not lie merely in a lack of houses. The real plight of dwelling is indeed older than the world wars with their destruction, older also than the increase of the earthâ&#x20AC;&#x2122;s population and the condition of the industrial workers. The real dwelling plight lies in this, that mortals ever search anew for the nature of dwelling, that they must ever learn to dwell. It is much the same way with technology. The forces we uncover and put to use will have a profound effect on what we build, how we live and how we think. Much like the automobile enabled suburbs, shopping malls and the consumer culture, the new information age is changing how we work, design our cities and see our place in the world. Therefore, it is misguided, if not dangerous, to try to judge new technology in the context of old paradigms. Completely different forces are being uncovered and put to wholly distinctive uses. A supersonic flight will always be subject to the limits of Newtonian physics; a Skype call is not. In my own particular context of spending most of my adult life in the emerging economies of Eastern Europe, I have been able to see this effect up close. While it takes decades to build infrastructure, the benefits of the information age are diffused at lightning speed. Research suggests that the effect in Asia and Africa may be even more dramatic. However, it is not the forces of energy trapped in chemical bonds or even the awesome power of the atom that we are now beginning to unleash, but human potential itself. While that may not manifest itself in large physical artifacts or supersonic speed, it matters, possibly more so than anything that has come before.

The Economics of Well-Being The advancements of the 20th century were impressive. Human and animal labor were replaced by machine power, enabling us to build massive structures and overcome the limits of time, distance and physical endurance. The result was a massive increase in economic output and life expectancy and an equally important reduction in poverty However, while everybody would like to have more material wealth, there is a growing body of evidence that suggests that beyond a certain point it does us little good. For example, Nobel laureate Daniel Kahneman has found that there is little benefit from income gains beyond a household income of $75,000.

And so, by evaluating new technology through old metrics we ignore the economics of well-being and risk confusing value creation with value capture. Does a banker with a multimillion-dollar bonus really represent a greater contribution than Tim-Berners-Lee or Linus Torvalds? . In a similar vein, is the Skype call between my child and her grandmother on another continent really worthless because its free? Should we evaluate fossil fuels, which are detrimental to our health and contribute to health care costs, the same way we do clean technology that has a much smaller environmental footprint? In the final analysis, the value of a technology isnâ&#x20AC;&#x2122;t its capacity to improve on achievements of the past but to unlock the potential of a better future. image credit: 140characters.ie

The Design Manager Comprehensive Role in Innovation Process – Patrick Le Quément Posted on June 7, 2013 by Nicolas Bry

What is a design manager? Is it someone who is active in design management? Well yes and no, or rather not completely as it implies only a part of the responsibilities of a design manager and that, in some companies, design management is not the Design department’s responsibility, it’s often in the hands of the Marketing activity.

Design management and managing design team Design management is principally concerned with the brand, creating a vision, developing it into a plan, deploying it, making regular checks on how it is progressing, correcting the trajectory whenever that is necessary, making a step by step journey towards excellence, towards creating even more value… Aim towards that nirvana for our brand that we all aspire to reach. (Also read the “design ladder” model which provides three levels for design: design seen as style, performance or strategy) Yes but, a design manager what does that mean if it is not related to design management? The very notion of the verb «manage» is interesting, it suggests to achieve by whatever means, to carry on despite difficulties or again, to succeed in accomplishing despite obstacles… as in : «I managed to get the last 2 tickets to the cup final». I manage a group of designers, or I’m the design manager? Managing a team of designers does not seem to warrant further explanations, or does it? Let me tell you that looking after the destiny of a team of designers, on a daily basis, is no picnic. Managing them is a little like watching with great attention a saucepan full of milk on a gas stove. Stressing! as the risk of spilling over if you wait too long are real, and the consequences annoying, but if you take the saucepan off the stove too soon, the risk maybe that you will have to face a mug full of lukewarm milk, which I don’t know about you, but it always makes me feel sick.

So, what is a good design manager? It’s someone who will leave the saucepan on the stove long enough to be at the right temperature, keeps himself focused, and takes a timely decision, what else?

A timely professional A design manager must be an excellent administrator who encourages beyond reproach behavior in order to avoid the prejudice associated with «arty types», which would reduce to ashes the carefully built edifice of creative excellence. If the team of a design manager is often referred to «that bunch of artists» the thing is beyond repair. The worm is in the apple, it signals the end is not far, the fruit will soon crash rotten to the ground. A good design manager will know how to orient his team towards excellence in order for it to be acknowledged as a well managed team. It will, for example, always arrive on time, (I never want to hear again : «We’re just waiting for Design»), it will anticipate, prepare its presentation meticulously, communicate beforehand with its partners, its logistics will be be at the very best level, it will not allow its monthly reporting systems to be late : be it its overtime statements, the projects worked upon or its traveling expenses.

Its reflexions will be nourished by a 360° approach, whilst making the team’s right hemisphere work at full power, after all, it is their most precious asset. A good design manager will run his team like a high level sport organization, in order to obtain a highly creative output. And that, only allows you to have a right to speak, not to be relegated as being a group of teenagers, nice bunch of people, but that cannot be trusted for the more serious stuff. But if, by chance, a design manager understands the importance of passing the day to day examination, that finally allows the word designer to be associated with the word rigor… Well then, the Design entity will not only have a say in the company but more than that, it will be able to claim a strategic role, if of course it has the intellectual qualities, that is…

A listening leader But then what is a design manager as viewed by his own team? It’s someone who ensures that his team remains at it’s highest potential level of creativity. He will be attentive to maintaining a careful balance, knowing that a good team spirit is something very delicate to nurture, particularly as today, teamwork has replaced the solitary genius. And yet the design manager knows that within his team, he has champions but also close seconds, and others… that even though we may find the George Orwell citation from Animal Farm cruel : «Everybody is equal, but some are more equal to others», a team could be looked upon as being made up of losers and winers, the losers being the majority of those whose projects have not been chosen. The design manager has to be able to handle such a sensitive moment when a designer learns that the project he has worked upon for so long has not been selected. He will make sure that no one loses face in this peer to peer relationship, he will know how to deal when that moment comes and someone realizes : «My project has not been chosen».

For design is a question of feelings, of engagement, of what I am, of the deeper me. So is this an impossible mission in which our design manager can only but fail? And what if… What if the design manager shared openly with the whole team the project? What if he sponsored each of the propositions made by the individual designers, encouraging each one to per sue an individual path, promoting the notion of a design open house where each one is given a specific mission? For then, at the moment the choice is made by the client, the projects that have not been selected can no longer be described as failures, they will have all taken part in the team’s exploratory phase, each one contributing to a part of the creative overview, leading to the emergence of the selected project. And that is for me the key to a team in full bloom. In the case where designers work within multidisciplinary teams, be they as members of an innovation team, or perhaps a feature team, the design manager should not step back and abandon his team member to the manager in charge of the entity. This is what I have too often witnessed, and it invariably leads to the creation of animosity and organizational dysfunctions. On the contrary, it’s all important that the design manager maintains an even closer relationship with the designer, helping him, coaching him to better contribute to the project team as a whole, and amongst other things : to distill creative free flowing approaches that might not be common practice to other members of the project team. So all is well, our Design team is in high spirits but, vis à vis the outside world, out there it can be cold and hostile, is our radiant team performing at its best level as a whole, or is it starting to purr like a self satisfied cat?

A holistic chef A design manager is not only responsible for the performance of his team at a given moment, he also has the responsibility to make sure that, where it is going is not a dead end. How many design teams have corked the Champagne following a well deserved success without noticing that it was driving on an almost empty fuel tank, that it

was feeding itself on petits fours and forgetting to nourish it’s source of inspiration? How many designers entered the boulevard of mediocrity without even noticing? Without inspiration, without external influences coming from the parallel worlds that exist all around us, we designers can become rapidly experts in our thing, we can lose the contact with the real world, the people, their habits, the permanently changing culture, the appearance of weak signals.

I’ve always been struck by this phenomena so often to be found with impassioned individuals, as for example automobile designers. Of course automobile design can become addictive, it can very quickly materialize in a closed world to outside influences, it then becomes a selective passion which eventually turns out to be an exclusive obsession. That is why, in the year 2000, when I clearly noticed that the creative inspiration of our team was waning, I proposed to our automobile designers to participate in a program called Trend Missions (which phonetically is close to Transmission): we took them out of their close environment, their comfort zone, we took them to the Milan Furniture Fair, we accompanied small groups of 5 to 6 designers for a 3 day discovery, meeting and exchanging with remarkable designers coming from other planets, be it Ross Lovegrove, Tom Dixon, Ingo Maurer, Patricia Urquiola, Richard Sapper, or Jean-Marie Massaud… We also visited extraordinary cities like Stockholm, Barcelona, London, Berlin, Tokyo, Moscow or New York. Each time we encouraged debates to take place, meetings, exchanges, and we made videos in order to share with those who were not lucky enough to join the trip.

Soon enough the videos were shared with our closest colleagues in other departments, Product Planing, Marketing, Advanced Engineering and then it spread like a bush fire, and the President himself was always keen to have his review and ask pertinent questions. Thus Corporate Design was able to instill an overture, to encourage a far greater sense of curiosity to its designers, which progressively turned into a new wind of change within the whole company. And that is also the mission of a DESIGN MANAGER, which we then can write with capital letters. Patrick le Quément is a world famous Car Designer. Patrick’s motto is Design = Quality; his structural changes of Renault design were to develop an independent and innovative formal language, turning Renault Design in an effective brand name. Patrick is now working as independant Designer, and President of the Advisory Board “the Sustainable Design School”. image credits: www.complydirect.com, unmaldesmots.blogspot.com, jdca2025.wordpress.com, www.flickr.com, www.interiordesign.net, blog.padmapper.com

Nicolas is a senior VP at Orange Innovation Group. Serial innovator, he set-up creative BU with an international challenge, and a focus on new TV experiences. Forward thinker, he completed a thesis on “Rapid Innovation”, implemented successfully at Orange, and further developed at nbry.wordpress.com. He tweets @nicobry

Innovation is All Relative Posted on June 10, 2013 by Kevin McFarthing

Many words and expressions are clearly relative, such as “larger” or “smaller”. These are easy adjectives as they often invite the word “than” after them. Other words are more subtly relative, like innovation; not grammatically but inherently. These thoughts were crystallized in an online discussion with Jorge Barba on the subject of innovation failure. Innovation often fails because companies are beaten to market by a competitor who scoops your offering on performance, timing or another element of competitive advantage. The creative concept may have been compelling and original; the project execution done perfectly to plan; the launch implemented flawlessly. You called everything right, except for one thing. Relative to your innovation, somebody else did it better. All innovation requires comparison to be successful. Companies often exhort their innovation teams to produce initiatives that are, for example in the case of Unilever, Bigger, Better and Faster. It always begs the question, “than what”? What exactly will the new innovation surpass in terms of size, performance and speed? In an ideal world, the innovation that is introduced to a particular market will work better, hit the market sooner and only as a result of that become bigger in terms of market share and revenue. Very often the comparators for the Bigger, Better and Faster are existing internal projects that don’t reach the company’s strategic objectives. This is just a start but only tells you that you are improving against your own internal benchmark. Introspection may leave you with the warm fuzzy feeling that you’re getting better but doesn’t remove the vulnerability to external threat. It’s much better to take an external perspective. It enables prioritization of those projects that will make the biggest difference; it will allow redirection of resource to improve those options with the greatest opportunity to have competitive advantage, and to those that are under the biggest competitive threat. The choice of comparator, whether company or product, is a crucial element of any innovation project. It’s very easy to stick with the “usual suspects” of existing products in existing markets from existing competitors. It may be fine to do this if the market in question is robust, growing and resistant to rapid change, commoditization and disruption. However if there is an opening to disrupt a key element of the offering, innovation must take that into context as a minimum, and ideally seize the opportunity presented by the change in market dynamics.

Consumers/users/customers are the ones to define the parameters by which innovation is measured. Whatever is important to them should form the basis for understanding and insight; what is then tested; and what is the focus for beating current and future competition. In addition there should be some foresight to anticipate both opportunities and threats for disruptive innovation. When Smith Corona decided to remain the producer of the world’s best typewriters they simultaneously defined the comparative set for any future innovation. As a result they were totally disrupted by the rapid adoption of word processing. Despite attempts to produce word processing machines, they remained firmly in the mindset of a typewriter manufacturer. They didn’t define comparators on the basis of consumer understanding. So it is important to remember that innovation is always relative. In that context, companies should: 

Fully understand what matters to consumers/users/customers

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Define innovation on that user understanding

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Put more emphasis on external comparison than internal options

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Compare existing and likely future competition on user parameters

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Actively include potentially disruptive options when testing innovation comparators

Innovation is relative, so always add “than x” after “better”. image credit: word collage image from bigstock

Kevin McFarthing runs the Innovation Fixer consultancy, helping companies to improve the output and efficiency of their innovation, and to implement Open Innovation. He spent 17 years with Reckitt Benckiser in innovation leadership positions, and also has experience in life sciences.

Using Books as Tools Posted on June 10, 2013 by Julie Anixter

We are celebrating and shining a spotlight on how innovators use Books as Tools™, tools for driving the shifts that innovation requires, with a series of the same name, and founded in on our belief that books aren’t really books. They’re incendiary tools for personal revolution and organizational change. They can and often do serve as inspiration or impetus at the right time. They don’t have to be consumed all at once like a cold beer. But they can be. And when consumed by the sip or the drink they are windows into the different worlds that form Innovation. Innovation is such emergent field that no one map can or will suffice because everyone comes from their own entry point. That’s why we created this series. The books we’ll highlight, some new and some old, have a particular magic for innovators, or those who simply want to own the vision, skills and confidence to move to new ways of doing, being and living. We’ll also be taking your suggestions, and look forward to being a big fat channel and discussion forum for the most inspiring works by, about and for people who want to innovate. Whether you’re trying to: 

break through some intellectual concrete,



find just-in-time expertise or new ways of working,

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compare and contrast architectural approaches to enterprise innovation in other industries,

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develop your own interpretation about what is needed now,



or simply find some solace, a pick me up, when the world or your own resistance is just too much, there is nothing quite like a book.

To quote the philosopher and inventor Dr. Fernando Flores, “reading is a conversation with the author, to which we bring our concerns.” And it seems we have no shortage of concerns when it comes to how to innovate. Which is where Books as Tools™ began.

We’re Aiming for a Non-Exhaustive Lexicon of Innovation

Did We Say We Plan to Go Deeper Each of these categories is drawn from, and against the challenges of meeting organizations where they are – across the spectrum of challenges they’re facing and the relative sophistication of their experience and going in knowledge. Conversations with the Authors is the Start. As you know, we started with How Stella Saved the Farm by Chris Trimble and Vijay Govindarajan. St. Martins’ Press and the International Thought Leaders Network, sponsored a series of Web Chats with Chris that many of you have participated in…we started with a great spirit of discovery, and here’s what we’ve learned…there is an appetite on the part of both the authors and our audience to talk about how to use

a book to drive change, where the ideas came from, what it was like to write a different kind of book (a fable!) and so much more. This led to a now ongoing series of terrific small

group discussions via

Abobe Connect (no firewall issues or software to download.) We will be doing more author Web Chats, sponsored or not…this has been our practice field and we’ll do our final one for the summer this Thursday, June 13 at noon edt, on How Stella Can Engage Your Students. You can join us by registering here.

And of Course, the Back Stories – How to Use these Books as Tools of Innovation In which we highlight one book from just three of the six categories and how it can be used it to lessen innovation anxiety and stoke your courage to act. Sometimes you need to know where to start. For each of us, the innovation journey starts in a different place. When an organization is taking a first step, and many are, the validation of the past is useful, and quite comforting. My friend the author and meta-communicator Judith Glaser is currently deconstructing the US Constitution through the lens of Conversational Intelligence™, and neuroscience – to understand how this collective conversation even occurred much less transformed history. It’s part of her life’s work – and she, like many of us, likes to ‘look back to look forward.’[2]

Historical

Contextual

Enterprise

Team

The Work

Personal

I’ve used Arie De Geuss’s book, The Living Company. As head of planning for Royal Dutch Shell he found himself wondering “what keeps companies ALIVE?” This book summarizes the research he commissioned at Royal Dutch Shell to answer the questions: how many companies have lived to be over hundred years old? If organizations were species, how many really thrive and persist (it’s a very small number) and why? What he learned has profound implications for leaders making decisions about where and now to invest. It’s sober. One of the four characteristics was a strong balance sheet or “cash in hand,” while still allowing “tolerance at the margins.” That this came from Royal Dutch Shell, which has been a successful performance engine company with a rep for imbedding innovation makes the book all the more powerful a reference: it can be done.

Historical

Contextual

Enterprise

Team

The Work

Personal

When we intend to embrace innovation, where do we begin? The five books in this category each provide sweeping, diverse interpretations of the innovation landscape – the state of the discipline today. They each come from thinkers and doers who’ve honed their perspectives on the anvil of the world’s most complex companies. One timeless example, Geoffrey Moore’s Crossing the Chasm, operationalized Everett Rogers’ Diffusion of Innovation research and “made the historic and elegantly obvious argument that there is a chasm between the early adopters of the product (the technology enthusiasts and visionaries) and the early majority (the pragmatists). Moore explored those differences and suggested attitudes and techniques to successfully cross the “chasm.” Those distinctions are still extremely useful, still very much with us as short-hand, today, explaining why innovation must be approached systematically.

Historical

Contextual

Enterprise

Team

The Work

Personal

While the five books in this category could each be used a primer for architecting and implementing innovation inside of large organizations, The Lean Startup is extremely important right now as a tool of change, because it’s focused on capabilities that are most often missing or atrophied in enterprises – specifically the way of working that agile software developers use: the disciplined learning, customer testing and iteration of new products and services. Author Eric Ries says: “Too many startups begin with an idea for a product that they think people want. They then spend months, sometimes years, perfecting that product without ever showing the product, even in a very rudimentary form, to the prospective customer. When they fail to reach broad uptake from customers, it is often because they never spoke to prospective customers and determined whether or not the product was interesting.” This is not just true of startups, this is true of very large corporations and explains in part the large failure rate of new product and service introductions. Stay tuned…and let us know if you’d like information about our discussions with these and many more authors by signing up here. Time to tool up and hit the books! [1] Dictionary.com [2] Judith Glaser; image credit: jsonline.com

Julie Anixter is a principle at Think Remarkable and the executive editor and co-founder of Innovation Excellence. She also serves as Chief Innovation Officer of Maga Design, a leading visual information mapping firm.The co-author of three books, sheâ&#x20AC;&#x2122;s working on a fourth on courage and innovation. She worked with Tom Peters for five years on bringing big ideas to big audiences. Now she works with the US Military, Healthcare, Manufacturing and other high test innovation cultures that make a difference.

Innovative Feelings Posted on June 11, 2013 by Jeffrey Baumgartner

When it comes to feelings, business innovation gets it all wrong. It takes into account feelings when it should not and then ignore feelings when it should take them into serious consideration. When You Can Ignore Feelings Typically, the only time business innovation takes into account feelings is during the ideation phase. Brainstorming, for instance, prohibits the criticism of ideas because to do so might hurt brainstormers’ feelings and inhibit them from sharing more ideas. Although this belief is widely held and applied in 1

numerous ideation processes, it has been demonstrated not to be true . Criticism of ideas, followed by debate and discussion results in a higher level of creativity. Moreover, in my own experience, allowing criticism does not lead to hurt feelings. Rather it leads to in depth discussion of promising ideas. Likewise, most on-line suggestion schemes, crowdsourcing tools and idea management tools include a voting system whereby participants can vote up ideas they like. However, unless these on-line tools specify criteria for voting (and I have yet to see a product which does so), voting is based on feelings. If you like an idea, if you feel good about an idea, you vote for it. However, on-line voting has been demonstrated to be useless at identifying particularly creative or even good 2

ideas . When You Should Not Ignore Feelings 3

As I’ve written here in the past, people do not like creative ideas . That seems to be because creative ideas mean change and that change is often outside the control of the people affected by the change. A classic example of this is Coca Cola’s 4

infamous launch of New Coke in 1985 . The people at Coca Cola researched people’s taste preferences thoroughly and used that information to change the recipe of their classic drinking product. In theory, this innovation should have worked fine. They had a product with massive global sales and they improved the flavour to make it even better. They even proved people preferred the new flavour in blind taste tests. What the researchers neglected to do, however, was to take into account Coca Cola’s customers’ feelings about the original soft drink. Sure, in blind taste tests, such people might have preferred the new drink. But when they saw that the company had changed their favourite drinking product, people felt upset. They felt hurt. Moreover, this change was outside of their control. Initially, Coca Cola did not ask their customers if they wanted a new drink. They did not offer customers a choice. Customers had to drink the new Coke because the old one was not available.

As you probably know, this was a disaster. Customers were upset and they bought less Coke. Ironically, they bought cola drinks from other brands, even though that also would have tasted different from the original coke — further demonstration that this dislike of the changed product was about feelings and not taste. Eventually, realised their mistake. They renamed the new drink “Coke II” and the original drink was reintroduced as “Coca Cola Classic”. People had a choice and they chose Classic. Indeed, Coke II eventually disappeared from the shop shelves. By finally offering their customers a choice, Coca Cola probably saved their company!

Customers’ Feelings When you introduce a new product or change an existing product, your customers will have feelings about the new product. This will be based on the product itself as well as customers’ previous experience with your products and your reputation. Consider Facebook. Every time the company makes a change in how it works, users are in an uproar. They don’t like the change. The liked the older version better. They did not get a choice and that irritates them. Users feel that the new version of Facebook has been implemented on them against their will. As a result, they simply do not like it — at least until they get used to the new version. Then, they forget about the change until Facebook introduces another change. Suddenly, the same users are in an uproar all over again! Suddenly, they prefer the version of Facebook that they complained about a few months ago. I suspect that if Facebook were to revert users to a older version of Facebook, users would again be in an uproar. That’s because people are not complaining about the functionality or quality of the new version. It is the change, over which they have no control, that they do not like. People do not like change without control or choice over the change. Employees’ Feelings If customers dislike innovative new ideas that result in change, employees truly hate such ideas. If customers feel unhappy about your new product, they don’t buy it. When employees dislike the operational changes that result from an innovation, they cannot easily change job. They are stuck with the change.

This is why employees are often critical of new ideas that will change operations, particularly when those changes affect their own activities. Indeed, if you have ever sat in on a staff meeting when a manager announces a change, the initial reaction is almost always negative, even when the change theoretically makes employees’ work easier. The computerisation of processes, for example, usually speeds up processes — however, there is typically a learning curve that temporarily disrupts operations. In spite of the improvement in efficiency, you can be sure that employees will complain about the change. They do not have positive feelings towards change when they have no control over that change.

What Can You Do? If your customers and your employees will dislike the change that results from your innovation, you might wonder why bother? What’s the point of innovating if no one likes the innovation. Unfortunately, if you intend to remain competitive in today’s hyper-competitive market, you need to out-innovate your competitors. On a positive note, after a change has been implemented and people grow used to it, they soon forget their dislike. Facebook users quickly grow comfortable with the updates they hated a couple of months previously, readying them to complain about the next update! Employees too soon grow used to change. Moreover, in view of high levels of unemployment, many employees have no choice but to accept change. But that does not mean they have to like it. And one danger you need to watch out for, when innovation changes operations, is employees who subconsciously sabotage change. For instance, a company is launching a new accounting system that will streamline billing and make it easier for customers to pay. However, it will result in substantial changes in operations in the accounting department. In order to initiate the system, the head of the accounting department needs to provide a report together with key information. She may postpone the report, believing she has more important things to do. Or she may present the key information in such a way that will make it more difficult

to implement the new system. She is not doing this intentionally. Rather, she does not like it that a new accounting system is being thrust upon her and subconsciously she does what she can to impede the change. Clearly, your innovation efforts need to take into account the feelings of customers and employees. When evaluating new ideas, do not just look at the metrics and the business analysis. Think about how those affected by the innovation might feel about it. If your customers love your product, they may hate any change. And if your customers hate your product (for instance, people everywhere seem to hate their telephony companies!), they will be suspicious of any change and hate it by default! If you are lucky to have loved products, consider whether or not the new product retains enough of what our customers love about your old product while at the same time being a sufficient improvement to bring in new customers? If your customers hate you, ask if the change will make you seem like an even more heartless, evil organisation. Importantly, bear in mind that the thing customers and employees feel worst about is having change thrust upon them in a way in which they feel they have no control. This is particularly true of employees. So, ask yourself, are there ways we can make employees feel they have control over this change? Can you involve them in the evaluation process, perhaps garnering feedback, so they feel they have some element of control in the implementation of a new idea? The danger here, of course, is that employees may provide only negative feedback, making it harder to implement your idea. You can also communicate to employees, in a sympathetic way, the complete story of why you are making the change, the benefit to the company and, most importantly, the benefit to the employees. You can sympathise about the initial struggle to implement the change and show how once the change is fully implemented, it will be better for everyone. You can also use creativity. Run anticonventional thinking (ACT) or other creative ideation sessions to generate ideas about how employees can benefit from the change. For instance, a consultant implementing change in a school system came to me recently. He explained that teachers were reluctant to change their ways, even though research had shown the new methods would be better for students. I asked him to think about how the change would benefit the teachers and suggested that he focuses some creative thinking on identifying teachersâ&#x20AC;&#x2122; benefits. Business Innovation Affects People Business innovation affects people, lots of them: your employees, your customers, your suppliers and possibly even the general public. People have feelings. If you disregard those feelings, you put your innovative efforts into jeopardy. So, donâ&#x20AC;&#x2122;t disregard feelings. Make them a key issue in innovation. References

Matthew Feinberg, Charlan Nemeth (2008) “The ‘Rules’ of Brainstorming: An Impediment to Creativity?”, Institute for Research on Labor and Employment Working Paper Series (University of California, Berkeley) Paper iirwps-167-08; http://escholarship.org/uc/item/69j9g0cg

Jeffrey Baumgartner (2010) “Voting in On-Line Suggestion Schemes” Report 103

“Everyone Loves a Creative Idea — Unless It Applies to Them” (2103) Report 103

“New Coke” Wikipedia

Jeffrey Baumgartner is the author of the book, The Way of the Innovation Master; the author/editor of Report 103, a popular newsletter on creativity and innovation in business. He is currently developing and running workshops around the world on Anticonventional Thinking, a radical new approach to achieving goals through creativity — and an alternative to brainstorming.

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