Archive for November, 2009

news business model summary

Posted by Tim in aggregate, business models, connect, filter, innovation strategy on 30 November 2009

The purpose of this particular post is to pull together links to all of the posts that I’ve done on the topic of new business models for journalism so that they are a bit easier to find. This is an important issue for news, but it illustrates a broader point. The key to adapting to disruptive change is to change your business model. We are seeing attempts to do this play out in front of us in real time, so I think it is a very useful learning opportunity.

This is what we’ve had so far:

So that’s a good summary of where we’ve gotten on this topic. It also highlights one of the difficulties on a blog – it’s hard to build a sustained argument across time and interspersed through other topics. And I’m not entirely convinced that tagging posts really gets around the problem – hence this summary post!

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the hardest part of innovation

Posted by Tim in innovation strategy, replication, selection on 28 November 2009

I was thinking about my talk from yesterday, and one bit that I just spontaneously threw in is probably worth expanding on. I spent a lot of this week marking assignments from my MBA students (who were an exceptionally good bunch this year). For the major assignment this year, I had them analyse their own firm or organisation using the Innovation Value Chain model developed by Morten Hansen and Julian Birkinshaw.

There are two key points with this model. The first is that there are three stages in the process of innovation: idea generation, selecting & developing ideas, and diffusing ideas. The key part, however, is that all three parts of that process have to be working well in order to innovate.

Both John and I have talked about the dangers of over-focusing on idea generation at the expense of execution, so we find this to be an extremely useful model. In particular, we have frequently observed organisations decide that they have to improve their innovation, and then sinking all of their resources and effort into idea generation.

This approach is flawed, and my MBA students demonstrated why. They came from a wide range of organisations – huge multinationals, small start-ups, government departments, and educational institutions. Despite these different backgrounds, their findings were remarkably consistent – only 3 of the 60 organisations that they work in are ideas-poor. The other 57 (that’s 95%!) have problems with either selecting or diffusing ideas.

So when firms focus on improving their idea generation, it is a mistake for two reasons. The first is that this is almost certainly not where their problem lies. They’re probably worse at execution. The second is that it does not take into account the entire innovation system. I just saw this quote from Russell Ackoff (via Venessa Miemis):

Improving the performance of the parts of a system taken separately will necessarily improve the performance of the whole.
False. In fact, it can destroy an organization, as is apparent in an example I have used ad nauseum: Installing a Rolls Royce engine in a Hyundai can make it inoperable. This explains why benchmarking has almost always failed. Denial of this principle of performance improvement led me to a series of organizational designs intended to facilitatethe management of interactions: the circular organization, the internal market economy, and the multidimensional organization.

Innovation within an organisation is a system. It is much more than simply idea generation. And if you focus only on improving your ideation, there’s a pretty good chance that your overall innovation performance will actually get worse. The hardest part of innovation is idea execution, and we simply must get better at it.

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What is an Innovation Culture?

Posted by Tim in innovation strategy, replication, selection, variety on 27 November 2009

Here are the slides + audio from the talk I gave this morning for the UQ Centre for Educational Innovation and Technology‘s planning day. One of the things that they were working on was thinking about what they want their innovation culture to be, so Phil asked me along to give some thoughts on that. I’m not sure how close my talk was to what he wanted, but I gave it a go. It’s too bad I didn’t record the Q&A at the end, because some really good ideas came up during that too. They’re a really bright group and I’m looking forward to seeing what they’re able to do.

Even though slideshare says that this runs for over an hour, the talk is just 18 minutes.

What is an Innovation Culture?

View more presentations from Tim Kastelle.

As usual, if I sound like Jabba the Hut, you have to upgrade your flash player – slideshare doesn’t play well with older versions.

Also, I’ve added an index page with links to all of the talks that we’ve put up. There are a couple more (with video) coming soon!

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Cooperative strategy

Posted by Tim in innovation strategy, networks on 26 November 2009

I’m buried in work at the moment, but I ran across this today via Venessa Miemis‘ twitter feed and thought I should share it – Towards a New Literacy in Cooperation in Business, put out by the Institute for the Future.

The summary paragraph on the page that I’ve linked to doesn’t do the report justice. It is a very nice discussion of the need for cooperation in business, and the impact that cooperation is having. In practical terms, that means that they are taking a lot of the hot topics of the day like open source software, collaborative innovation, aggregating internet strategies and distributed production/innovation and making very useful strategic recommendations for how to integrate these ideas into your own strategy.

Here’s what they say about networks:

Assigning value to social connectivity. Network mathematics provides a way to analyze
and evaluate the value of social connectivity of an individual or organization. As we’ll discover when we look at the catalysis lens, the new technologies of cooperation include systems to support affiliate networks and track their reach both within an organization and outside it. Interpreted through network math, this data could become the basis of auditing individual and group cooperative behavior and even valuing entire companies.

The report then follows up with a number of actionable recommendations. It’s well worth taking a look at if you’ve been curious about how to make sense of these cooperative trends.

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If we were starting today, would we do this?

Posted by Tim in innovation strategy, time on 25 November 2009

If we were starting today, would we do this? A perfect question to ask for business model innovation from journalist Jason Fry in a recent post (hat tip to Mark Coddington). Fry looks at some of the issues facing newspapers these days, and decides that the entire model needs to be rebuilt from scratch. I think he’s right, but the issue illustrates why it is often so difficult for established industries to react to disruptive innovations. Here is his final conclusion:

Why didn’t we change? Journalists are masters at filtering, synthesizing and presenting information, yet we’ve spent more than a decade repurposing a 19th-century form of specialized storytelling instead of starting fresh with the possibilities of a new medium. Newspapers could have been Wikipedia, instead of being left to try and learn from it. And what are we learning? The news article is in some fundamental ways just as broken as the game story — if it weren’t, Jimmy Wales wouldn’t see a surge of traffic to Wikipedia in the wake of any big news event. We need to rethink the basics: If we were starting today, would we do this? But when will we unshackle ourselves from print and really ask the question? And at what point will the answer come too late to matter?

The problem is path dependence – it is very difficult to act like you are starting over again today. You already have people, processes and structures in place, and all of them have to change if your answer to that question is no. That is painful for everyone, and it is one of the reasons that organisations end up fighting rearguard actions that look insane from the outside – such as the American Booksellers Association arguing that selling books for cheap is bad for consumers. That strategy will never work, but it is easier than asking Fry’s question – if we were starting today, would we do this?

The problem that we face is that there are competitors starting today. And they don’t have to do things the way that you do. In fact, if they’re innovative at all, they definitely will do things differently. So you better be asking that question too, and acting if your answer is no.

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Picking winning innovations

Posted by John in innovation on 24 November 2009

Tim has written a bit on Charles Darwin so I thought I would follow along this them with another idea. As Tim says, the first big test of Darwin’s radical ideas on the formation of new species was a presentation to the Linnean society. Darwin’s supporters chose the Linnean society because of its preeminence in the scientific community of the day.

I think the most interesting aspect of the first presentation of the Origin of Species is that the members of the society found it completely unremarkable. Indeed, some members actually fell asleep. It wasn’t until Darwin’s book was published and widely read that the full implications of the theory, and what it meant for biology, religion and society, were realized.

It’s a good innovation story because it reminds us that experts can’t be relied upon to pick the significance of breakthrough ideas and technologies. We become experts through extensive training in how to see the world in a particular way. The famous historian of science, Thomas Kuhn, called these ‘ways of seeing’, paradigms. Experts don’t choose to see the world in a particular way. Instead, the paradigm is a deeply ingrained set of language and mental models. Expertise is valuable, but it also comes with a cost in terms of existing commitments to old ideas.

A consequence of this is that real breakthroughs are often unheralded because they don’t conform to the ways that experts think they should work. An example of this is what I think is a very significant innovation in the energy industry- and its not solar! In fact, it’s probably one of the last things you would think of. The breakthrough is…., shale gas! The significance of the technology that allows gas to be extracted from shale (a very common rock) has slowly caught on but I think that Daniel Yergin is right when he talks about the possibility of this innovation creating a fundamental shift in the global energy industry. Now if we start thinking about cheap natural gas in conjunction with fuel cells that produce distributed electricity at very high efficiency, things start to get really interesting. However, the dominant mindset in Australia is that success is defined by your ability to turn your gas reserves into LNG and export it over the 30 year life of the gas field.

The energy game might be about to change quickly and the major players could be caught napping.

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innovative shadow art

Posted by Tim in innovation on 24 November 2009

I can’t think of a good innovation story to tell here, I just think this is really cool:

Be sure to watch the last part with the piece that is simultaneously an eagle, a dragon and a lion. It’s shadow art by Niloy Mitra and Mark Pauly at Stanford. The page that explains this video is here, along with links to other work.

Fascinating stuff!

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the best solution to Search Engine Optimisation

Posted by Tim in business models, innovation strategy, replication on 23 November 2009

One of the ideas that I really liked in Trust Agents by Chris Brogan and Julien Smith is that to be successful on the web, you need to ‘change the game’ (my full review of the book is here). The idea here is that you need to create an entirely new category for whatever it is that you’re doing. This is essentially business model innovation.

This got me thinking about what John and I are trying to do with this blog. Our main purpose is to get our ideas to spread by writing about them in a way that we hope is useful to people that are actually managing the innovation process. On Friday, we were talking a bit about one of the most popular posts that we’ve had so far – John’s first post on the three horizons model. He wrote that back in May, but ever since then the post has been hovering near the top 10 most viewed pages on the blog. It is one of the pages that is found quite frequently by google, and that seems to be what keeps people coming to see that page. As we were talking about it, we got to thinking that it must be showing up pretty high on the search results to keep driving so much traffic. So we searched for ‘three horizons model’, and sure enough, there’s John’s post on the first page of results.

That in turn got me curious about the aggregate, filter & connect model that I’ve been slowly working out here on the blog. It’s an idea that seems to have some resonance when I explain, so I was wondering where ‘aggregate filter connect’ shows up on google. That post is actually the first result, which means that I have done the first step in the Trust Agents scheme – I’ve staked out an area that no one else is working in, which is great.

But of course, the key to innovation is getting the idea to spread, which is another matter. But I’m working on that! I’ve discussed the idea here on the blog, and in public lectures. A few other people are starting to talk about it as well – we’ll see how it goes.

In thinking about all of this, I had an insight over the weekend. Making your own game as Brogan and Smith recommend is actually the best solution to Search Engine Optimisation. While John and I were talking, he said “it would be great if we could get the blog to show up when people search for ‘innovation strategy’”. It would be, but if we spent all our time working on that, we wouldn’t really be creating anything new. I think we’re much better off making our own game – creating a space that we know more about than anyone else does, owning it, and then getting the idea to spread. That’s what all innovators do, whether they are creating products, services, new ways of doing things, or new ideas. If you get too hung up on things like SEO, that is another example of paying too much attention to tools, and not enough to process.

The best method of Search Engine Optimisation then is to create your own category. Now is probably a good time to get started on that…

(picture from flickr/Danard Vincente – creative commons licensed)

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focus on process, not tools

Posted by Tim in book riffs, innovation strategy, networks, replication, selection, variety on 22 November 2009

I’m reading Kill All Your Darlings by Luc Sante at the moment, which is very good. It includes a number of pieces on culture, many originally from Village Voice or the New York Review of Books. Sante is a fantastic writer and there are a number of great lines throughout the book, but one just jumped out at me in his piece on the photographer Walker Evans.

He had never been a camera snob, or even, although he was a superb printer, much concerned with the mechanics of his art (once when a student asked him what camera he had employed to take a particular shot, he became irate, declaring the question tantamount to asking a writer what sort of typewriter he’d used).

I love this little story for a number of reasons. The simplest is because I’ve never been a big fan of camera snobs, or anyone that gets too hung up on equipment. Equipment can make some things easier, but it can’t replace knowledge and experience accumulated over time.

The second reason that I like the quote though is that it illustrates a problem that we often run into in firms that are trying to implement a new innovation program. Often these initiatives come about because someone at the top has said something like “innovation has been one of our ‘core values’ for values, so we better start doing something about it.” The first thing that always happens in these cases is that the organisation goes out and gets some software. It might be something that supports message forums for Communities of Practice, or a tool for capturing ideas. The flaw in this approach is that the minute you approach Knowledge or Innovation Management as an IT problem, the initiative is dead.

Managing innovation is a people and process problem, not a technical one. Yes, it helps to have some tools to use, but if you want your organisation to be more innovative, you have to be good at generating ideas, choosing the best ones, and getting those ideas to spread (variety, selection and replication – an evolutionary process). These are people problems, and they are often network problems. Get your processes right first, then you can get some tools to help facilitate them.

If you focus on improving the innovation process, not the tool, you will be much more likely to be successful.

(photo by Walker Evans)

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Jeff Jarvis on new business models for news

Posted by Tim in business models on 22 November 2009

I’ve talked a fair bit about business models for journalism, but Jeff Jarvis has thought about it a whole lot more than I have. Here is a video of Jarvis talking about the new ecosystem for news, and how to build successful, money-making news organisations:

Jeff Jarvis on New Business Models for News 2009 from CUNY Grad School of Journalism on Vimeo.

This is part of Jarvis’ New Business Models for News project at the CUNY Graduate School of Journalism. I love their approach. I think that changing the business model is exactly the right approach to take. They include spreadsheets for all of the business models that they work on including hyperlocal approaches, a new metro news model, and non-profit ideas. This level of detail is essential to figuring out how to change an industry. These models may or may not ultimately be the ones that end up working, but this is the kind of approach to take towards business model innovation – which is the best response to a turbulent market.

On the other hand, here’s an example of a pretty closed model that has worked reasonably well – I’m still trying to make up my mind on the Apple approach, more on that soon I think…

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