Archive for November, 2009
connecting when you’re not aggregating
In a nice piece in the latest newsletter from edge.org, Annalena McAfee talks about the impacts of digital technologies on modern life (check out the whole piece – it’s quite good). Her first interesting contention is that she feels that younger people are more polite, and more engaged with adults than kids were when she was young. I find this to be mostly true as well. Then she says this:
As to predictive programs and I-Tunes “Genius”, don’t they serve a useful and very old-fashioned purpose? Like your best friend, or the cheerful proprietor of the neighbourhood bookstore, or the dreadlocked manager of your favourite record shop, they know what you like and will helpfully alert you when that artist/writer or, someone operating in a similar field, is about to produce.
“You’ll love the latest Alice Munro. And if you like Devendra Banhart, check out Vetiver.” But unlike your best friend, or the long-vanished bookstore owner, or the former manager of the defunct record shop — all of whom made a number of unintentionally insulting errors of taste — these predictive programs get it right 90 per cent of the time. I am willing to trade my free will – surely already compromised by my birthplace, my parents’ religion and circumstances, my genetic inheritance — for these time-saving and life-enriching programs.
That’s a perfect description of how the aggregating sites are then able to connect – two of the three key components of many successful online business models. I think she’s exactly correct about the benefits of these services. At the same time, I share a bit of Tom Slee’s concern about how currently these models are concentrated in the hands of very large firms. Aggregating is pretty much impossible for smaller firms/organisations. But I do think that there are opportunities to become effective filters and connectors. In particular, as good as the aggregating recommendation services are, I think that there is also space for experts in a particular field to act as filters & connectors by compiling their own information sources.
This is a method that was common in the early days of the web, when the original set of links at yahoo.com were all hand-selected, and it went out of fashion as google took over. As much as I like the google algorithm for some things, it basically identifies the most popular things, not necessarily the best. If you can critically identify the best resources in a category, this has significant economic potential – even if you’re small. Maybe especially if you’re small.
markets really are networks
Posted by Tim in innovation strategy, networks on 14 November 2009
For my money, David Weinberger is one of the sharpest thinkers around on the topic of the impact of the internet on business. All three of his books are worth reading (see my brief thoughts on Small Pieces, Loosely Joined). Today on his blog he posted the transcript from a speech he gave to the Canadian Marketers Association called Markets are Networks.
It’s an outstanding talk, and Weinberger succinctly summarises a number of ideas that I’ve been giving a lot of thought to over the past few years. He opens by saying:
As Doc Searls said, markets are conversations. But, Doc said something else that I think is just as brilliant: “There’s no market for messages.” That’s harder for marketers to hear, since it points to the essential fact of traditional marketing: The people marketers are talking to generally don’t want to hear from them. And I want to add one more thought to this mix: Markets are also networks.
I strongly agree with this. Thinking about markets as networks is useful in two ways. The first is metaphorical – if you view markets as networks then you interact with them differently than you do if you view them as a mass of standard utility-maximising agents, or differentiated demographic groups. The way that you build a market for an innovation is quite different when you think this way.
The second difference is that you have access to different analytical tools when you look at markets as networks. This view lets you use complex (social) network analysis, which give you new analytical insights into the management of your markets. Both of these changes in viewpoint can be quite powerful.
Weinberger also says:
Companies are hierarchical because hierarchies scale up to the size of an army (= the number of Ashton Kutcher’s Twitter followers). But hierarchies don’t interact with networks very comfortably. E.g., who speaks for the company?
This is an interesting issue at a couple of levels. One is that of the hierarchy interacting with the external (market) network, which is the point that Weinberger is making. When the firm interacts with a network, there are multiple points of contact, so managing a consistent message is a lot harder. Our research has also shown that this is also an issue within firms. The interactions between the official hierarchy and the informal networks within the firm are not always smooth. Managers that are aware of the networks that they are dealing with are often better at getting things done than those that simply rely on hierarchy. This is something that even the army has realised recently.
The economy really is a network – and it’s time that we start managing it like one.
implementation
Posted by Tim in filter, innovation, replication, selection on 13 November 2009
I just saw this on Merlin Mann’s twitter feed:
The guy who worries people will “steal” his idea might better ponder why nobody “steals” his implementation.
As I keep saying – ideas are cheap, and implementations are valuable. We need to find better ways to cycle through ideas rapidly. This reminds me of a post from lifehacker which includes this quote from a tech CEO:
Share your great ideas promiscuously as possible to attract collaborators, even in highly specialized science and engineering fields. Otherwise your ideas will never gain traction and actually happen, and you will always be a dreamer. In the unlikely event that someone steals your idea, take it as a compliment and move on to the next great idea.
We generate ideas constantly. The key is to figure a routine for finding the best ones, and implementing them.
network talk by Mark Newman
Here’s a really good talk by Mark Newman called Structure and Dynamics in Complex Networks:
Structure and Dynamics in Complex Networks
If you’re curious about network analysis and have never run across it before, this gives a pretty good explanation of what it is, and some of the things that we can analyse with network tools. It runs about 45 minutes.
Henry Chesbrough on business models
Posted by Tim in business models, filter, innovation strategy, selection on 12 November 2009
Stefan Lindegaard has a post with links to a lot of good innovation related material, including an interview with Henry Chesbrough.
The Chesbrough interview is terrific. He is best known for his research on open innovation, but a central part of that has been his work on business model innovation, which is the focus of the interview. In Chesbrough’s view, many good ideas for new products and services fail not because of any flaw in the idea, but because firms are unable to construct a business model for them that is different from their current one.
The moral of the story, my interest in this business model innovation is that if we are going to sustain research and development in our society, we have to take seriously the task of how to innovate not only new technologies but how to innovate business models to commercialize those technologies.
The main point here is that business model innovation is an essential element of success, but that firms often find it extremely difficult to implement new business models. Consequently, their success in innovation becomes an issue in effective change management, rather than simply relying on developing good ideas. This is a bit alarming because it’s hard enough just coming up with good new ideas! If you then have to change the structure of your firm to implement them, the challenges increase exponentially.
On the other hand, so do the payoffs. Most of the big success stories recently have not been the result of the introduction of novel new products or services, but instead have been due to creating effective new business models. There were book stores before amazon, search engines before google, and mp3 players and online music stores before iPod/iTunes. Those three have all been successful because of new business models – they have created new revenue generation mechanisms, new value propositions, and new value creation networks to build new business ecosystems around products and services that weren’t particularly novel. I am increasingly convinced that this is where we all should be concentrating our innovation efforts – particularly our management attention.
priorities
Posted by Tim in innovation, innovation strategy on 12 November 2009
Here’s a great quote from Peter Drucker:
There is nothing so useless as doing efficiently that which should not be done at all.
We often get asked about how innovation relates to efficiency programs like lean and six sigma. Obviously, ideas that you implement within these programs that improve efficiency are often innovative. And we try not to discount the importance of making small incremental innovations whenever possible. However, Drucker’s quote brings up a critical point – for innovation to be effective it has to be tied in with a strategy. We often see firms that focus on efficiency simply for efficiency’s sake – this is useless. In order to figure out if something is worth doing, we need to know how it fits within an overall strategy. When we innovate it is often experimental, which can make it difficult to tell how an executed idea fits with strategy. Nevertheless, the more closely strategy and innovation are integrated, the more likely it is that we’ll be successful over the long run.
Reflections on Remembrance Day
A few years ago, on a holiday in France, my wife and I visited the Somme battlefield near Amiens to see the grave of her great uncle, Alfred Gaby, who had been killed during the final months of the first world war. After visiting the cemetery where he was buried, we then drove back along the road going west through the little villages with names that are familiar to many Australians because roads, parks and towns are named after the battles where so many soldiers lost their lives. Poziers, Bapaume, Hamel and Peronne are street names in various suburbs in Brisbane.
I think people have different reactions to visiting these sites. We drove through Poziers where around 7000 Australian soldiers were killed in four weeks of fighting and then on to the ridge top of Thiepval where a very large British memorial overlooks the slopes where thousands of soldiers from the Pal’s Battalions were cut down with machine guns. Despite the carefully kept graves and gardens in the cemeteries, these are not peaceful places to walk around. Nonetheless, its hard to grasp the scale of the killing by looking at memorials and reading about numbers of dead and wounded.
The last place that we visited was the Newfoundland Memorial at Beumont-Hamel, which was quite different from the other memorials on the Somme. Here it is possible to walk through the trenches and walk across no-mans land to the German trenches. It’s possible to think about glory and sacrifice at the neatly kept memorials but its hard not to be affected by the experience of stepping out of a trench and looking over the hundreds of meters of flat land to the well-defended enemy trench. After a few moments of comprehending what had happened here on the 1st of July, 1916, my overwhelming reaction was that of outrage over the stupidity of the Western Front. Why did this all have to happen? What would it have taken to stop it?
Sometimes history moves with a path dependent momentum that makes change very difficult. The correspondence between the Kaiser and the Czar (Nicky and Willy) is fascinating to read. While both men are heads of state and cousins, they are unable to stop the events that both know will lead to senseless carnage and destruction. There is a desire from both men to act, but the challenges of altering course are too great to overcome.
I think the lesson from this is that it takes a great degree of effort and leadership to make changes when we are talking about society, global politics and the economy. The morally correct action might be obvious but that does not ensure that the right outcome will eventuate.
What are the global challenges that we are facing today? Think about poverty, reforming the banking system and responding to climate change, for example. Do we have the courage and capacity to lead the change, or are we still marching to the guns of August?
forms of innovation
Posted by Tim in business models, evolving economic entities, innovation on 11 November 2009
One of the points that I consistently stress in my innovation classes is that there are many forms of innovation, and that people and firms need to think about more than simply product innovation. This idea goes back at least to Schumpeter and his five forms of innovation:
- New product or service
- New method of production
- New source of supply
- New market or application
- New method of organising your firm or industry
A lot of people think only of the first type when they think of innovation, and I think that’s a mistake. John Hagel, John Seeley Brown and Lang Davison have recently published a report called the 2009 Shift Index for Deloitte, which tries to identify the key forces of long-term change for business. Today they published a follow-up report looking at specific industries. Hagel discusses the key points in today’s publication in a blog post, which includes this point:
Innovation, at least as traditionally defined, does not appear to offer a solution -
Perhaps one of the most innovative industries in the US – the technology industry – has also experienced one of the most significant declines in ROA since 1965. This suggests that innovation defined as product or even process innovation is also not sufficient as a response to growing economic pressure. With knowledge flows becoming more and more important as a source of value creation relative to knowledge stocks, we suggest that another form of innovation – institutional innovation – may be much more helpful in turning the performance trends around. This kind of innovation focuses on redefining roles and relationships among institutions to generate and sustain richer knowledge flows across institutional boundaries, something most institutions find very challenging today.
I think that this is an essential point. It’s one of the reasons that I keep talking about business model innovation. Yes, new products and services are important. But the firms that make a difference are the ones that are coming up with new business models – these are the things that re-organise an industry. When you are developing an innovation strategy, it pays to think about all of Schumpeter’s different types of innovation. Pay particular attention to the last one – new ways of organising are the ones that will make your fancy new product or service obsolete before it even comes out. It’s better for you to be making these changes than your competitors.
more on open education
Seb Schmoller has written a post discussing a call to action for creating the university of the future. It came out of a meeting held last month on the topic and it has five key points including:
We must enable a culture of sharing. Recognizing that the sharing and reuse of scholarly work is a key component of the university of the future, we advocate building a culture of sharing in which concerns about intellectual property, copyright, and student-to-student collaboration are alleviated and the model of proprietary work dissolves in favor of a more open one. To this end, we must establish reward structures that support the sharing of work in progress, ongoing research, highly collaborative projects, and scholarly publications of all kinds, including reputation systems, peer review processes, and new models for citation of such content. We must empower students to share knowledge with one another in ways that are viewed as collaboration rather than cheating. Assessment models must change to support these practices. Ultimately, we see a culture of sharing as a crucial piece of the infrastructure of a scalable educational system that can support the millions of learners who will participate in it.
It’s part of a larger document (pdf version) which identifies the five points out of the more than 50 action points that were identified at the conference. In light of my talk last week on open education, I thought it was interesting to see more on the topic.
The issue of openness in higher education is an interesting one. I definitely think that if educators view their primary job as shifting information into the heads of students then they are effectively already out of a job. There are plenty of other ways to transfer information that are cheaper and probably more effective than lectures. To me, open access to information is a central part of developing a higher education strategy. And the actions that we have to focus on are aggregating, filtering and connecting. Randy Bass includes some suggestions of how this might work in his keynote talk at UQ’s Teaching and Learning Week.
Finally, here’s Larry Lessig’s keynote address at last week’s Educause conference, which addresses many of the same issues:
Lessig is always worth listening to, and this is a good talk. Essential for anyone interested in the future of education.
more on the difficulties of prediction
Posted by Tim in innovation strategy on 10 November 2009
Today I ran across this talk from Mark Buchanan:
Prediction and its Limits in Socio-Economic Systems
It’s from the International Workshop on Coping with Crises in Complex Socio-Economic Systems that took place in Zurich last May. It provides excellent support for the main point in John’s recent post – that the economy is a complex system, which makes it impossible to predict. Consequently, we need to plan and develop strategy that allows for significant amounts of uncertainty. And one of the best ways to cope with uncertainty is to innovate.
The site also also has talks by Didier Sornette and an all-star cast of econophysicists, if you’re interested in such things (like I am!)
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Metrics
Tim was named #5 in the Top 40 Innovation Bloggers in 2011 at Innovation Excellence.
Tim and John were both named in the Top 40 Innovation Bloggers in 2010 at Innovation Excellence.
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