Archive for November, 2010

The Social Construction of Business Models

Posted by Tim in book riffs, connect on 30 November 2010

One of the tricky parts of doing social science is that a lot of the things that we try to study are not actually real. Or, as Steve Horwitz puts it in an interesting post trying to define Austrian Economics:

The “facts” of the social sciences are what people believe and think.

This has some important implications. One of them is that we always need to question the assumptions that underlie what we do. Many of the elements of the markets and environments that we work in are actually socially constructed. This means that they exist and have meaning because we all agree that they exist and have meaning.

One of the best examples of this is money. A dollar bill doesn’t have any inherent value. We are able to use it to buy things because we all agree that it has value, and moreover, we all agree (roughly) what that value is (here is a paper explaining how this works in a fair bit of detail).

One consequence of this agreement is that we take money for granted – it’s just there and it works. But the form of money that we use has biases built into it – that is one of the points that Douglas Rushkoff makes in this talk summarising some of the points from his book Life, Inc.:

The thing about social constructions though, is that since we’ve built them ourselves, we can also change them ourselves. If we start to question some of these deeply embedded concepts, it actually provides opportunities to create new things. We tend to think of money as the something that we get from banks. But if you start to question the basic assumptions around money, you start to realise that there are range of creative ways that we can redesign the money business model.

If you search for “the future of money”, you’ll get a Wired magazine article, a book, and a web project – just for starters. The web project includes this video talking about some of the ways that money could change once we start thinking about it:

The Future of Money from KS12 on Vimeo.

There are a lot of different ideas about how to best create and exchange value flying around. As people experiment with these, we’ll start to see which ones might work, and which ones aren’t as good. I’d be surprised if we don’t see some significant changes to the way we conceptualise money over the next 10 years or so.

There is an important innovation story in all of this as well: to find opportunities to build new business models, look for socially constructed platforms in the economy, and look for opportunities to redesign them.

Here’s an example closely related to the ideas around money – personal lending. In What’s Mine is Yours, Rachel Botsman and Roo Rogers include an interesting discussion of the evolution of the personal lending market. They include this illustration of the changes (also available on the book’s website):

Take a look at the initial state – personal lending was in the domain of banks. Then we started to see peer-to-peer lending systems, building on the micro-finance idea. The cutting edge in this area right now are collaborative systems that are built around alternative currencies. And the future (and a great source of opportunity) is building reputation-based exchange systems.

None of these innovative business models would have happened if people hadn’t first questioned the basic assumptions upon which money and lending are built. But once these assumptions are questioned, then the opportunity arises to build novel business models that are based on a different socially constructed system. This is one very interesting method for finding innovative new business models.

What’s Mine is Yours has a number of good examples of how new business models can be built out of collaborative systems. I’ll talk more about these later this week.

But for now, just think about this idea of social construction. Most of our economic systems are built on concepts that exist simply because we all agree that they do, and which also have an agreed-upon meaning. If you start thinking about these concepts, you can find ways to build systems based on different concepts.

This is a great opportunity for business model innovation.

(photo from flickr/Sami Keinänen under a Creative Commons License)

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The Role of Strategy

Posted by Tim in innovation strategy on 29 November 2010

There is a terrific quote in Creative Disruption by Simon Waldman about strategy. It is from Markus Reckling, the Managing Director of Corporate Development for Deutsche Post – here’s the quote plus Waldman’s interpretation:

“I used to think that strategy was about avoiding unforeseen events; now I it’s about making sure you can deal with them.” In other words, you cannot eliminate uncertainty – but if you want to be able to deal with it, it helps if you have the strongest possible core business to build from.

This is really important. A lot of the tools that we have to help build strategy don’t prepare us to deal with a dynamic environment – instead they primarily serve to reduce the perceived level of uncertainty that we face. This is a trap.

Here is John explaining a bit about why:

The danger with a lot of the tools that we use in strategy is that they seem very precise. This precision appears to reduce the uncertainty that we face. Since most of us are uncomfortable with uncertainty, this is a good thing. The problem with this is that it does not reduce the actual amount of uncertainty we face. Therein lies the danger – reducing perceived uncertainty can lead to a false sense of security, leading us to be even more vulnerable to major disruptions in our environment, or to radical innovations.

When you think about strategy, remember that it is supposed to help us compete. This means that we need to build tools that evolve, that are dynamic, and the equip us to deal with change, not to reduce uncertainty. We have discussed some approaches to doing this previously.

Here is a test for your strategy: when you think about it, does your strategy make you feel more comfortable about the future? If so, that’s a pretty good sign that you have an uncertainty-reducing strategy. If that’s the case, start working on building one that makes you uncomfortable. That’s the way to prepare for change.

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Make Your Own Box

Posted by Tim in business models on 28 November 2010

I was talking with an entrepreneur recently and he told me a story about their early days. The sold a bunch of their products to one of the local department stores, and they thought this was the big opportunity that they needed. But none of their stuff sold, and they couldn’t figure out why. So they went to one of the stores to see for themselves what was going on. They couldn’t find their things anywhere. Finally, after going through the whole store, they found their things in a department that to them seemed completely wrong.

Here’s what he said about that:

That’s when I realized that we couldn’t sell through other stores, because they’ll put you in whatever box they think is right. We learned you have to make your own box.

And that’s exactly what they’ve done – they’ve made their own box. They’ve taken a product that might seem fairly conventional, and they’ve created an entirely new meaning around it. They have their own line of stores, and even through the Global Financial Crisis they’ve been growing incredibly quickly.

That’s a pretty good metaphor for business model innovation. Instead of getting put into whatever box seems right, and then competing on price or differentiation, in business model innovation you create an entirely new market by making your own box.

It’s not the right route for everyone, but it’s worth thinking about. How can we make our own box?

(photo from flickr/Mr. T in DC under a Creative Commons License)

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The World is Getting More Complex – Or Is It?

Posted by Tim in complex systems on 26 November 2010

Note: This is a guest post by Neil Kay. It is part of a chapter that he is writing for a book that I am editing with David Rooney and Greg Hearn called Handbook of the Knowledge Economy, volume 2. We’ll post Neil’s chapter as he writes it over the next few weeks. He explains the overall theme of the chapter here. I’ll do the same with mine, which is seriously overdue too. – Tim

It is a truism that the “modern world is more complex” that those of yesteryear. A Google search with that phrase brought up about 159,000 results at the time of writing.

On the other hand, a Google search of “modern world is less complex” brought up precisely one result, a link to a book extract from Minogue (1963).

But if we took our hypothetical skilled potter from Crusoe’s time and placed him in a historical context, we would likely find progressive reduction in complexity over time in the form of increasing standardization of artifact characteristics and/or work processes (Blackman, Stein and Vandiver, 1993, p.61). And Crusoe would probably have agreed with Kay (1997, p.228) that his own unfortunate predicament helped show that “It is difficult to argue that navigating and running a lightly manned and push-button controlled supertanker is a more complex business than was the operation of an eighteenth–century sailing ship” (a crude test of this would be to compare the cumulative and aggregate man-years of experience and training needed to competently captain and crew an 18^th Century sailing ship versus its modern equivalent).

Minogue (1963) actually says; “There are many respects in which the modern world is less complex than many which preceded it” (p.121), and I note; “It is as easy to identify trends towards increasing simplicity of tasks and decisions (Kay, 1997, p.228, italics in original).

While there is a lot of duplication in the 159,000 Google results for the “modern world is more complex” (and, in fairness, not all of them may be agreeing with the statement), it does seem that Minogue and I seem to be in a minority of two, at least as far as Google is concerned. But I am heartened that if all the textbooks can be wrong on Crusoe’s non-existent economy, then the conventional wisdom can be wrong in this as well, and Minogue and I might just be right. And it is a remarkable fact that another Google search on the word “de-skilling” currently brings up about 368,000 results – remarkable because the phenomenon of “de-skilling” directly contradicts the conventional wisdom elsewhere on Google that the “modern world is more complex”. If it were a person, we might say that Google was suffering from cognitive dissonance

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Be Prolific and Focused: Innovation Lessons from the Beatles

Posted by John in innovation on 24 November 2010

Tim and I are now writing a lot on the importance of focus. Being successful with innovation is about managing the paradox of ‘disciplined creation’ and it helps to have some clear ideas about what you are trying to achieve and how you are going to create value. Part of this discipline is taking time to reflect on progress and problems and this in itself may lead to other innovation opportunties.

Managing innovation as a chain of activities such as idea generation, selection, conversion and diffusion will help the disciplined approach but the weakness of the chain model is it understates the importance of feedback and learning. If we can learn from what we create then our subsequent innovations are probably going to be better and happen faster.

I think there are probably two categories of prolific innovators. One takes a scattergun approach and tries many things in many areas and some of these turn into a once-off shot. Others are more prolific but focus on a particular market or technology. Failure and success are both productive here because they can sow the seeds of new ideas. Dyson is a really nice example of this type of business.

Another example of a prolific innovator arrived in my email the other day. It’s not what you would call a typical innovative business but it demonstrates the value of being both prolific and focussed. As you might know, the Beatles albums have been released on iTunes this week. They have sold about 450,000 albums already, which is very surprising because I thought that most people who were ever going to own a Beatles album already had the ones they wanted.

Going onto iTunes and looking at the albums I was amazed by how much music they produced in shuch a short period. We are really talking about 7 years and I found myself spending a long time listening to the samples. Some of the songs like ‘Something’ and ‘Hey Jude’ will always stay in my head, but others like Blackbird and She’s Leaving Home, I had quite forgotten about. To me, they still sound good over 40 years after the band split up.

What becomes apparent when doing an iTunes sample tour of the Beatles is how fast their music changed. In six years they went from ‘I Want To Hold Your Hand’ to ‘She Came in Through the Bathroom Window’. Hard core Beatles fans will be able to offer many opinions but I think that really focussing on the musical creativity and spending a lot of time in the studio was essential to the progress. Perhaps they could have made more money from tours but they spent more time on what they were really good at, including developing their own studio which launched the careers of others such as James Taylor. The love-hate relationship between Lennon and McCartney was also essential. Neither of them really reached to same songwriting peak after the demise of the band.

Creativity and risk-taking are on one side of the innovation coin. The other side is hard work and discipline.

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Common Knowledge

Posted by Tim in complex systems, innovation on 24 November 2010

Following on from my last thread (The Complexity of Economics and the Paradox of Mankiw), it is common knowledge amongst economists that Robinson Crusoe is an example of a simple (albeit fictional) economy, and it is even more common knowledge that the world is more complex today compared to yesteryear.

Sometimes things are so obvious they just beg to be questioned. I hope to tie up these two related threads with a final posting

Thread 1(a) Robinson Crusoe had a simple economy – or did he?

Beginning students are often introduced to economics by way of Robinson Crusoe’s production and consumption choices on his desert island. A Google search for “Robinson Crusoe economy” gave about 33,000 results at the time of writing, and the back cover of my edition (Defoe, 1995) notes it was even “cited by Karl Marx in Das Kapital to illustrate economic theory”. Mankiw (1998) follows this well-trodden path and devotes two quick quizzes (pp. 51 and 53) based around Crusoe’s situation to demonstrate the logic of production possibilities, advantages of specialization, opportunity cost, and gains from trade. The first “Quick Quiz” reads:

Draw an example of a production possibilities frontier for Robinson Crusoe, a shipwrecked sailor, who spends his time gathering coconuts and catching fish. Does this frontier limit Crusoe’s consumption of coconuts and fish if he lives by himself? Does he face the same limits if he can trade with natives on the island?

The correct answer to the first question here is of course “yes”, and to the second is “no”, as every well brought up economics student knows – or quickly learns if they wish to pass the exam (but note that the second question only makes sense if the answer the first question is “yes” – which should be a bit of a giveaway).

It would of course be wonderful if in the spirit of Bill and Teds’ Excellent Adventure we were to validate all this by actually asking the real (which in this paradoxical world means the fictional) Robinson Crusoe his own answer to these questions. In fact, Crusoe anticipated these particular questions in his journal; you must now imagine him sitting in a modern Economics 101 tutorial:

I had nothing to covet for I had all that I was now capable of enjoying … I might have raised ship-loadings of corn, but I had no use for it; so I let as little grow as I thought enough for my occasion. I had tortoise or turtle enough, but now and then one was as much as I could put to any use. I had timber enough to have built a fleet of ships; and I had grapes enough to have made wine, or to have cured into raisins, to have loaded that fleet when it had been built. But all I could make use of was all that was valuable. I had enough to eat and supply my wants, and what was all the rest to me? If I killed more flesh than I could eat, the dog must eat it, or the vermin; if I sowed more corn than I could eat, it must be spoiled. The trees that I cut down were lying to rot on the ground; I could make no more use of them than for fuel … I possessed infinitely more than I knew what to do with (Defoe, 1995, pp.98-99, italics added)

So the correct answer to Mankiw’s first question is actually “no”. And if “no” is the answer to the first question, the second Mankiw question does not make sense (I feel some slight guilt if this means that Economics 101 might now have students interrupting my colleagues with; “but Crusoe actually says….” – or even worse, students failing Economics because they gave the right answers here).

Crusoe’s world has no opportunity cost, no need to choose between competing demands on his time. It is not even economics in the sense that “economics is the study of how society manages its scarce resources” (Mankiw, 1998, p.4), because Crusoe makes it clear his world has no scarce resources. Crusoe’s situation is not untypical of hunter-gatherer societies with “limited wants and unlimited means” as noted in the eponymous work by Gowdy (1997) who cites the example of the !kung hunter-gatherers of Southern Africa who spent only 12 to 19 hours a week getting food (Gowdy, 1997, p. xv).

Some variants of the Robinson Crusoe economy also model Crusoe’s leisure/work tradeoff on the assumption his time is a scarce resource, but of course if there was one resource he had in abundance stranded on his desert island, it was leisure time. And as he would advise a modern Economics 101 tutorial, “I wanted nothing to make it a life of comfort” (Defoe, 1995, p.101)

While Crusoe does not have an economy in the accepted economics sense, he does pursue knowledge activities such as exploration, experimentation, design, hunting, foraging, inventing, reading, writing, spying, navigating, and teaching (Man Friday). In such a context, complexity matters. Complexity can be defined in many different ways depending on context and purpose, but a holding definition here is that complexity refers to the parts and interrelationships (such as options, solutions, tactics, routes, meanings, etc.) facing a decision-maker like Crusoe. Some of Crusoe’s knowledge could be said to increase complexity where they suggest or reveal possibilities of which he was previously ignorant. At the same time, some of these knowledge activities decrease complexity, just as Mankiw’s text helps reduces complexity for the student by teaching them which are the important relationships between curves.

Crusoe’s struggles with jar (or pot) making here illustrate how this knowledge activity progressively (and imperfectly) reduced complexity in terms of design and preparation options using experimental methods that modern R&D scientists would recognize:

It would make the reader pity me, or rather laugh at me, to tell how many awkward ways I took to raise this paste; what odd, misshapen, ugly things I made; how many of them fell in, and how many fell out, the clay not being stiff enough to bear its own weight; how many cracked by the over-violent heat of the sun, being set out too hastily; and how many fell in pieces with only removing, as well before as after they were dried; and, in a word, how, after having laboured hard to find the clay – to dig it, to temper it, to bring it home, and work it – I could not make above two large earthen ugly things (I cannot call them jars) in about two months’ labour (Defoe, 1995, p.92).

Crusoe faces a much more complex set of tasks and decisions (assessing potential options) in creating his pots than would a skilled potter of his time, Crusoe’s task is to reduce that complexity by eliminating inferior options as far as possible. But how does Crusoe’s quest to reduce complexity sit with the common observation that progress means things getting more complex? This leads us on to the next post…

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The Innovation Matrix: People or Tools?

Posted by Tim in innovation strategy on 23 November 2010

I had lunch last week with some managers from a company that is trying to improve their innovation performance. They kept asking me what tools should they be using to do this? Is there software that will help, or a process, or some other tool? I had to explain that there are a lot of tools available, but that first you have to figure out your innovation strengths and weaknesses.

I’ve actually gotten this question from a few different firms over the past month, so I thought that I’d revisit a post from last year which addresses this issue, and combine it with some of our recent ideas. First, here is the post:

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.

Last week’s post on the innovation matrix helps to explain this issue. Here is the matrix again:

When people want tools, they are trying to move to the right by increasing the commitment to innovation. The problem with this approach is that commitment to innovation and innovation success aren’t directly connected. You can increase one without increasing the other (or decrease).

Thinking too much about tools is one way to end up in the bottom right square in the matrix – All Talk, No Action. This happens when you approach innovation as simply an engineering problem – “all we need to solve this is the right tool.”

Improving your innovation competence comes from getting better at managing ideas from inception through execution and on to diffusion. So the first step in getting better at innovation is not bringing in tools. The correct first step is to gain an understanding of innovation as a process. The next step is to figure out which part of the process is most in need of improvement. Only then can you choose the right tools to help you.

It might be the case that you don’t need any tools at all. But you can’t know this without thinking about your innovation process first.

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Innovation and Ambidexterity

Posted by Tim in innovation strategy on 22 November 2010

Guest Post: by Ralph-Christian Ohr

Tim wrote a post on “Staying Innovative While Growing”. I fully concur with his conclusion: “But it’s another innovation paradox – the small firms that might be most innovative often don’t have the market clout to get their ideas to diffuse. The firms that are big enough to get ideas to spread might not have ideas worth spreading.”

I think this paradox is related to an inherent ‘job sharing’ between firms of different size when it comes to innovation. Basically, both big and small firms are innovative – however, innovation tends to take place in different fields for them.

Utterback and Abernathy have provided great insights into the interplay of product and process innovation. I just came across their paper from 1975 – it’s a great piece of research on the emergence of dominant designs.

Considering the progress of new technologies, the following phases can be observed:

At the beginning, a few small firms usually drive the new technology. This phase is determined by uncertainty, hardly allowing huge investments – which in turn is required for serial production. Therefore, big firms usually hesitate during that phase and do not immediately “jump” on the new technology. The flexibility of SMEs allows tapping into new, small markets and to further drive the new technology by launching additional innovations.
Once a dominant design has been established, the market starts consolidating and innovation of the product slows down. Process innovation is taking over now. At this point, bigger firms can play out their strengths: optimizing manufacturing processes and lowering production costs require significant investments. Small firms are mostly not capable of accomplishing these. Furthermore, big firms often have a higher credibility in the marketplace as well as globalized sales channels, being capable of covering high revenues. When the technology has achieved a certain maturity, the market is dominated by a few big, specialized firms only.

It seems that firm size corresponds to certain strengths and weaknesses when it comes to innovation. Although it might be indicated to strengthen

radical, groundbreaking innovation for bigger firms and
innovation marketing and continuous improvement for SMEs,

- the primary field of innovation tends to be pre-determined by firm size. Innovation strategy and portfolio (incremental vs. radical) needs to comply with size. Interestingly, firms in the marketplace seem to complement each other and practice an inherent ‘job-sharing’ throughout a life cycle.

Yet, I think growing firms are able to maintain their innovativeness for novel offerings by keeping ‘start-up attributes’ incorporated in their organization. This can be leveraged by:

forming and growing an ambidextrous organization, i.e. being capable of balancing exploitation of current and exploration of new business,
establishing and nurturing dedicated units for growth and innovation – those ’incubators’ need to be separated from core business in order to develop the required culture and mindset.
reinventing and realigning the organization, in case it’s stuck in the ‘short term thinking trap’. Bring the elephant to dance again!, as Steve Blank puts it.

I’m convinced, the future belongs to firms that understand best how to integrate and balance opposites. As Steve Denning has pointed out: we need to break free from the 20^th Century ‘either-or’ thinking. In the 21^st Century we need ‘both-and’ thinking – firms are required to be big and small, efficient and risk-taking, ordered and creative, sustaining and innovative.

Looking forward to your thoughts.

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Don’t Underestimate Business Models that Don’t Look Like Yours

Posted by Tim in business models, evolving economic entities, innovation strategy on 21 November 2010

I ran across a shocking quote today. It’s from an article in the July issue of The Monthly by Malcolm Knox called The Next Chapter – which is about the current state of play with e-books. Here is the quote:

Until this year, the argument over e-books centred on whether they would ever overtake print. Industry members surveyed at the 2009 Frankfurt Book Fair predicted digital sales would overtake print in 2018; only one-fifth of respondents thought digital would never overtake print. The argument has now gone beyond ‘if’, to ‘when’.

Really?

Take a look at those numbers again – and remember that they’re only a year old: 20% of respondents said that e-books would never overtake print, and of the 80% that thought that they would, the average estimate of ‘when’ was 2018.

That blows my mind. Look – I love print books, as anyone that has visited my home or office can attest. I’ll probably have print books around in pretty serious numbers until I die. But then, I still have 800 records on vinyl – so I’m clearly not the average guy here. Even so, it doesn’t really stretch my imagination too much to think that e-books will outsell print books by, oh, next month or so. Maybe not exactly then, but soon enough.

When I read that, it reminded me of another story – that of Kodak (recounted very nicely in this post by Simon Waldman, and also addressed in his new book Creative Disruption. Here’s an article on the Kodak v. Fuji price wars from Fortune in 1997:

That poses three big issues for film companies: One is the danger–still much in dispute–that film sales will soften as digital cameras made by companies like Sony, Canon, and Casio take up a bigger share of the market.

Sounds a bit familiar, doesn’t it?

Here’s one of the issues: people are used to competing against others that have basically the same business model that they do. Film companies compete against other film companies, newspapers compete against other newspapers, and so on. They tend to have the same target markets, pretty similar value propositions, supply chains and value networks. Greg Satell explains why this is often the case in his post today:

The truth is that we don’t put much effort into forming our opinions. Most of our information we pick up either completely passively or at least without much reflection. We go along with the crowd much more often than most of us would like to admit.

However, what is surprising is the extent to which crowds affect our thinking on issues that are not only substantive, but for which we are professionally responsible.

That’s what makes business model innovation so powerful. Large incumbents are set up to crush any new entrants that try to compete against them using a similar business model. But when the business model looks different, their first reaction is to say “we don’t have to worry about them, they’re completely different from us.” Thinks: Newspapers and Craigslist as a good example.

But it’s not the new competitors that look just like you that you have to worry about the most. It’s the ones that seem to be completely different. Here’s an example from a more recent article on Kodak from Business Week:

In an era when innovation is all the rage, many CEOS, like Perez, are discovering that product innovation alone isn’t enough to save sick companies or turbocharge healthy ones. For many, their core businesses are being disrupted by globalization, technology shifts, and new competitors. They must reinvent the company. Even at healthy companies, business model innovations are essential to retaining their competitive positions. Microsoft (MSFT )Chief Executive Steve Ballmer says he no longer thinks of his competition as individual companies. Instead, “it’s alternative business models that we’ll have to compete with or embrace,” he says. His two biggest threats are the open-source phenomenon and advertising-supported software.

The first challenge is to recognise the threat, and then the second is to get an accurate handle on what it means, and when it is likely to become important. As the publishing and film examples show here, there is danger in complacency. After saying “that’s completely different”, the next response is often “yes, that will be important – in another 10 years.”

That assessment may well be correct – but if you hear it about your market, it pays to at least do some thinking about it for yourself. It’s relatively straightforward to compete against firms using the same business model that you are – you just have to be cheaper, or better, or faster. Competing against a different business model is a lot harder. It usually means that you have to change your business model too – and this is not easy. You have to break quite a few connections to do this.

You will usually have time to react to these disruptive changes, but actually doing so is often difficult. That’s part of what makes disruptive innovation so disruptive.

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You Are What You Do

Posted by Tim in innovation on 20 November 2010

I often have people ask me how to build an innovative culture. The simple answer that is hard to execute is this: you build an innovative culture by innovating.

Executing ideas is a critical part of innovation. If you think that innovation is only about having ideas, you won’t actually make anything. As fake Mark Zuckerburg says to the fake Winklevii in The Social Network: “If you guys were the inventors of Facebook, you’d have invented Facebook.” In other words, if they had done anything other than talk, they would have had an actual thing.

We have to actually make things happen to innovate.

I ran across two excellent blog posts today that reinforce this point (read them both – they’re excellent). The first is from the 37Signals blog, and it includes this quote from Jason Fried:

The things you do more often are the things you’re going to get good at. So if you get really good at spending money, you’re going to be really good at spending money. If you have to work on making money from day one, you’re going to get really damn good at making money. And that’s what you need to be as an entrepreneur…

So again, to get good at innovation, we can’t just talk about it, we have to do it. And the more we actually execute ideas, the better we get at it. This is the way to build an innovative culture.

The second post is from John Winsor (via Diego Rodriguez). His title pretty much sums things up – It’s Not About What You Say You Do, It’s About What You Do.

Exactly.

The analogy that he uses is learning to surf. Winsor says:

Yet, I’ve discovered there are very few people who actually surf. Why is that? There is one simple answer: surfing is hard. I have a personal theory about surfing. It takes riding a thousand waves to become a surfer. It doesn’t matter if you catch 20 waves a day for 50 days or one wave a day for a thousand days; you just can’t get around the experience of learning the hard way.

If you want to be an innovator how will you ride a thousand waves? Start innovating. Start doing and making.

So that’s it. The way to be an innovator is to innovate. The way to build an innovation culture is to innovate. That is both simple and hard. It’s hard because there are many obstacle to innovation. It’s simple because the more you innovate, the better you’ll get at innovation.

Start practicing.

(photo from flickr/mikebaird under a Creative Commons License)

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