Archive for February, 2011
Network Economy Problems: How to Get People to Give Up Old Ideas
Posted by Tim in complex systems, connect, networks on 28 February 2011
One core innovation challenge is this: it’s often not enough to simply have a great idea yourself – to get it adopted you also have to get people to give up their old ideas. Here is how John Maynard Keynes talked about the problem:
The difficulty lies, not in the new ideas, but in escaping from the old ones, which ramify, for those brought up as most of us have been, into every corner of our minds.
In her book The Watchman’s Rattle, Rebecca Costa explains this problem in terms of memes and supermemes. Meme is the concept that Richard Dawkins originated to explain culture evolution (there’s a good, short explanation of the idea here). The brief wikipedia definition is that “meme” “identifies ideas or beliefs that are transmitted from one person or group of people to another. The concept comes from an analogy: as genes transmit biological information, memes can be said to transmit idea and belief information.”
Costa identifies supermemes as an integrated set of ideas that become deeply embedded within a society. In fact, she says that they become so deeply embedded that they crowd out new ideas – which stifles innovation:
This brings us to the second reason supermemes spread like viruses: It is much easier to conform than to make a decision about every issue, regardless of whether it’s deciding the color of our roofs to the est car to drive or the most efficient way to educate our children. The more complex life becomes, the more difficult it is to acquire the knowledge we need to make a correct decision. Not only are the decisions we face more complex, we also have to make many more of them and make them faster. From this standpoint, it’s no wonder that group behavior and group think are so seductive. The alternative is to become paralyzed by too much information, too many choices, and too much difficulty.
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Over time, supermemes become so widespread that they begin acting as filters through which other memes must pass, and only thoughts, behaviors, and beliefs compatible with the supermeme survive. This explains why so many insightful ideas and curative solutions have difficulty coming to fruition. It has nothing to do with the idea itself. As Dean Kamen pointed out, the real obstacles are our “attitudes”- the supermemes that drive how we think and act.
How do we fight this? I’m only halfway through the book, so I’m not sure what Costa’s suggestions are yet.
But one idea that we’ve talked about here is the importance of thinking of innovation as a multi-stage process. As she explains in that quote, it isn’t enough to have a great idea. It’s not even sufficient to prove that it works. To be effective innovators, we have to do both of those things, and then we have to get the idea to spread.
If you are not thinking about idea diffusion right from the start, you are likely to run into trouble. Here are some ideas for improving diffusion:
- Get ready for a fight: as Keynes points out, we have to get people to give up their old ideas before they will pick up our new ones. This requires dedication and perseverance.
- Better yet, duck the fight by getting people to help you develop the great ideas in the first place. Here is how Graham Hill explains the approach to co-creation:
Co-create value together with customers – A company creates the most advantage by bringing itself, the right partners and customers together in the co-creation of value. Enough value must be co-created to satisfy all involved. Customer co-creation should not be played out as a zero-sum game.
- Co-creation requires effective management of value networks. This is the main message in Verna Allee’s work (see her latest book on the topic here). If you are clear about where the value is being created, it will enable more effective co-creation, and consequently better idea diffusion.
Costa explains how complexity encourages us to follow the herd – it’s less taxing cognitively to do so. This is great for us individuals, but not so great for us as innovators.
In these circumstances, having great ideas isn’t enough. We have to be able to get them to spread. Thinking about how to do this more effectively will make us more successful at innovation.
Are You Too Scared to Ask a Good Question?
Posted by John in innovation on 24 February 2011
One of our long term research projects is the problem of innovating in large complicated businesses such as engineering and mining companies. We have been using social network analysis to understand innovation because one of the biggest innovation challenges involves finding good ideas and existing expertise to do something in a better way or to come up with a better design.
Like other research projects, we have found some things that we didn’t expect to influence the innovation process and one of these is the concept of ‘search’. In a perfect world, I will search for information very broadly until I find the right person who can help me. In real organizations, people are pressed for time and go looking for knowledge in familiar places. In several interviews, we have asked engineers why they went to a particular person for advice. Sometimes the answer is because they knew they were dealing with the expert in the area, but other times the answer is “I don’t know why I went there”. It’s a bit like being in a maze. Under time pressure we go to what we can see rather than thinking more strategically about what the maze looks like.
I’ve interviewed one manager who tries to address this problem by coaching his staff in how to search for ideas and expertise. As someone who works across different parts of the business he has developed rules of thumb about who to approach and how to approach them. As he says, he has a very good strike rate and he shares these techniques with others. This type of ‘network intelligence’ is very valuable.
Another obstruction to effective search is ‘social risk’. In our surveys and interviews this is a major factor that stops the building of effective networks. Think of it this way – when I ask you a question, I’m also telling you what I don’t know. To reach out and search for knowledge is an act of trust. In some organizations where there isn’t a culture of support, asking a question is professionally risky. I might approach people that I like and trust but this puts us back into the limited search problem, with lost opportunities for new ideas and connections.
One thing that has become apparent with one of our research partners is the importance of taking time to build relationships across the business. This involves spending a day or two off site, which is a major investment for the business. The payoff is that people get to meet each other and understand what “makes them tick”. One interviewee mentioned that empathy was important because it made him more likely to respond to a request if he knew the person and not just the engineer. These relationships just don’t seem to get built with teleconferences or the intranet.
It seems that personal contact can build trust and empathy in a way that electronic communication can’t. If the personal connections aren’t made, then the electronic networks just don’t seem to work very well.
“Create the Niche You Will Occupy”
Posted by Tim in innovation on 23 February 2011
In a nice post inspired from the classic TED talk from Malcolm Gladwell, Harry Connolly’s talks about the importance of experimenting in a guest post on Charlie Stross’ blog:
Another important point from the video is that consumers do not always know what they want. This isn’t exactly a revelation to readers, who are always discovering unexpected pleasures inside book jackets: Did I know I wanted to read a mash up of James Bond, Office Space, and HP Lovecraft? Hell no. But I did, very much so. I mention it because it’s something that should be said often. Readers don’t always know what they want. We should be trying new things constantly, just in case we come across our new favorite flavor, and good writers create the niche they will occupy.
Think about that for a second – he is saying that novelists, who invest a year or so into each book, should be trying new things constantly, just in case they work.
He’s right.
And if novelists can afford to experiment with something into which they invest so much time, effort and thought, surely you can afford to test out one small new idea that you think will make things better. Start small, and get the hang of experimenting.
Once you’re good at it, you can start thinking big: What space do you want to occupy? It can be a space in the market, a space in your job, a space in your life. Stross is right – we can create our own niche in any of these places.
So what will it be?
(and in case you’ve somehow missed it, the Gladwell talk is well worth watching)
Without People You’re Nothing – Joe Strummer
I watched The Future is Unwritten again this weekend, the documentary about Joe Strummer by Julien Temple. The Clash were my absolute favourite band for a long time, and I’ve always thought highly of Strummer. The movie gives a pretty balanced view of his life, exploring his faults as well as his strengths. But the point that comes through strongly is how inspirational he was to a lot of people. His final quote in the movie captures some of that:
Throughout his career, Strummer was interested in connecting with people. He seemed a lot more at home giving out flyers on the boardwalk trying to get people to come see his last band, The Mescaleros, than he did being a rock star playing Shea Stadium. In his later years he started organising campfires – the idea being that there was something primal in the kind of connections people make when they share stories and songs around a bonfire.
In this last spiel, he talks about how important it is to connect with people – stop running down your own “little mouse trails…. without people, you’re nothing.”
I keep talking about how we need to ideas to ideas, and ideas to people – but ultimately, all of this is only worthwhile if we’re connecting people with people. Ideas and innovations are simply the vehicles that enable this.
Use Data to Defeat “the Focus Group of One” Problem
Posted by Tim in innovation strategy on 21 February 2011
The most successful ad campaign that I ever designed only ran two weeks before the owner of my company killed it. I was working for a software company at the time, but our parent company also had a consumer hardware division. I was asked to help with their advertising. The budget was extremely limited – every week we ran a 2×3 inch ad in the Saturday newspaper. That was it. Usually, those ads were crammed with data on different PC configurations that we were trying to push.
So one week, instead of advertising a bunch of specifications with a price, I ran an ad that said:
Why Pay Less?
I can’t remember the exact wording, but underneath that there was a short tagline that said something like “we have the best quality PCs in town – you get what you pay for.”
The next week, our sales doubled.
I ran the ad again the following weekend, and sales went up again.
Then the owner of the company killed the ad. Why? He didn’t like it. His argument was that people wouldn’t respond to it. When I showed him the sales data, he didn’t care. He didn’t like the ad, and that was that.
It was as though we ran a focus group of one, and he was the only member. I’ve worked for a few organisations where the CEO often made “Focus Group of One” type decisions. I’ve always found it pretty frustrating, because I’m more of an “Experiment, then Assess with Data” kind of guy.
Here’s a good talk by Erik Brynjolfsson of MIT, explaining how to use data to support innovation:
He makes a couple of important points. One is that the gap between companies that are performing well and those that are struggling has increased dramatically over the past 10 years. In his studies, Brynjolfsson has found that much of this difference can be explained by differences in the effective use of IT in enhancing innovation. Specifically, two of the areas where the better companies are particularly effective are in experimenting, and in diffusing the ideas the work well.
He uses the casino company Harrah’s Entertainment as an example of a firm that has done this particularly well (there’s a nice slide show on Harrah’s data mining here).
Harrah’s used customer loyalty cards to compile a huge amount of data on their customers. Once they had initial data, they then ran multiple experiments on innovative new methods for promoting their casinos. The data that they gathered enabled them to determine which promotions were most effective and which were less good.
One tangible outcome of this came in identifying where their money was coming from – over 80% of their revenue was coming from about a quarter of their customers. Those must be the high rollers, right? That’s how all of the casinos were acting, since it was the high rollers that were getting all of the free rooms and other stuff.
The only problem with that strategy is that those weren’t the people that were actually driving revenue. Instead, the money was coming from middle-class, mostly retired slot-machine players.
Once Harrah’s figured this out, they were able to develop a number of promotions targeting this group. Then they ran experiments to see which worked best.
It would be obviously much better to use tools like this to support innovation that generates a better world in some way, rather than producing people that gamble more. You need to make sure that you are innovating with purpose. However, the general principle of using data and experiments to improve innovation is still useful.
Using data and experiments is one good way to get around the “Focus Group of One” problem. It’s not the only way – there are many other approaches that can also do this, such as customer-led innovation – but one way or another, if you’re going to innovate, you have to figure out a way to gain a deep understanding of what your customers need.
And often, when you learn this, it’s not what you expected when you just thinking about it on your own. That’s the danger of “Focus Group of One” type thinking – it can lead you very far astray.
All Life is an Experiment
Posted by Tim in complex systems on 18 February 2011
Uncertainty is one thing that makes a lot of people uncomfortable. Unfortunately, in most business situations, uncertainty is a fact of life.
Graham Hill made an interesting response to my post yesterday about simplistic, complex and simple models. He said:
The real world is complex . Most businesses simplify the complexity to ‘manage’ it. Complex is too hard!
The critical point to remember with models is that they are simply models. They simplify reality in order to give some order to chaos. But this simplification always leaves things out – and this can lead to problems.
How can we cope with the uncertainty caused by complexity without relying too much on oversimplification?
As Graham also pointed out, Dave Snowden’s method in complex, unknowable situations is to probe, sense, respond.
This may be an oversimplification, but my suggestion is to keep Ralph Waldo Emerson’s words in mind – and experiment:
All life is an experiment. The more experiments you make, the better.
Experimenting is a key innovation skill. It’s a way to substitute a bunch of small bets for one big bet.
All life is an experiment, and the more experiments you try, the better off you are. If you practice this idea, it makes it a bit easier to cope with uncertainty.
And remember that all of the models that we try aren’t actually real – they’re hypotheses. We are using them to test out ideas about how the world works. If the models don’t help us do that, it’s time to move on to a new model.
Every model that we build is an experiment too.
(picture from flickr/David July under a Creative Commons License)
Three Types of Models: Simplistic, Complex and Simple
Posted by Tim in book riffs, complex systems on 17 February 2011
I was watching some MBA presentations this week, and they reminded me of a section of “On Exactitude in Science” by Jorge Luis Borges. In this short story, Borges describes a map the size of the world (From Jorge Luis Borges, Collected Fictions, Translated by Andrew Hurley Copyright Penguin 1999):
. . . In that Empire, the Art of Cartography attained such Perfection that the map of a single Province occupied the entirety of a City, and the map of the Empire, the entirety of a Province. In time, those Unconscionable Maps no longer satisfied, and the Cartographers Guilds struck a Map of the Empire whose size was that of the Empire, and which coincided point for point with it. The following Generations, who were not so fond of the Study of Cartography as their Forebears had been, saw that that vast Map was Useless, and not without some Pitilessness was it, that they delivered it up to the Inclemencies of Sun and Winters. In the Deserts of the West, still today, there are Tattered Ruins of that Map, inhabited by Animals and Beggars; in all the Land there is no other Relic of the Disciplines of Geography.
Suarez Miranda,Viajes de varones prudentes, Libro IV,Cap. XLV, Lerida, 1658
A map is a type of model, and any time you make a model, you have to leave things out for the model to be useful. Otherwise you end up with a map the size of the world.
The MBA talks got me thinking about the models that we make when we study business. We can classify these models based on how they reduce the system that we are trying to describe down into some kind of (ideally) more coherent set of ideas. In doing so, we are trying to follow Albert Einstein’s advice that “Everything should be made as simple as possible, but not simpler.”
In the MBA presentations, I saw three types of models:
- Simplistic: these are the most common types of models in business, and they don’t follow Einstein’s advice – the actually make things simpler. These are models or frameworks that lack depth. Because of this, the ideas being put forward often fail to include critical information. In most cases, simplistic models are not just inaccurate, they can be dangerous to take seriously. One example of a simplistic model is “house prices can only go up.” We’re still trying to sort out the results of many people taking this simplistic model too seriously. That’s the danger of simplistic models. The good side of simplistic models is that these are the type of models that you get when you approach things with a Beginner’s Mind. So simplistic models can be useful for finding underlying assumptions that experts overlook or assume away.
- Complex: these are models that are closer to “map of the world size”. They add in a lot of details – a whole lot. Complex models are the ones that lead to the creation of powerpoint slides with 250 words of text on them. Complex models are often better than simplistic ones, because they include more of the relevant details. However, the trade-off for this increasing accuracy is a reduction in clarity.
- Simple: you get simple models when you really understand a topic. I used to do industrial water treatment consulting. I would design treatment programs for plants, but on a day-to-day basis these programs had to be executed by the plant’s operators. Usually these were people with limited education, and often with English as a second language. Despite these obstacles, my manager used to say that if you couldn’t explain the principles of our programs so that the operators understood what we were trying to do and why, then you didn’t understand it yourself. He wanted us to be able to explain simple models – ones that really were as simple as possible, but not simpler.
What I observed while working with the MBA students is that the presentations would work their way through all three types of models. We would start with simplistic ones. Sometimes these would provide unique insight, but usually they were too basic to be useful. In response to this, the students would load them up with every fact and idea that they could generate, leading to complex map of the world type models. These were better, but difficult to understand. Eventually, they could take these facts and ideas and distill out the critical points. That is when they got to simple models.
Two people that have done some great thinking on how to effectively deal with complexity in business are Dave Snowden (example here) and Ralph Stacey (example here). They both worry that most business models are simplistic, and they try to develop ways of seeing and acting that avoid this problem.
When you think of how the world works, are you using a simple model or a simplistic one? The difference is important. You can only get to simple with a deep understanding of the system you are trying to picture.
(picture from flickr/Chuck “Caveman” Coker under a Creative Commons license)
Tools Don’t Solve Problems, People Do
Posted by Tim in complex systems, innovation strategy on 16 February 2011
What do you do if the tools you use to improve your innovation process actually make it worse?
I had a meeting yesterday with one of our research partners to go over some of the results of our recent survey. The research has two parts – we are mapping the innovation and knowledge-sharing networks within the organisation, and we are also looking at how effective they are at managing the innovation process. Finally, we’re trying to figure out how these two things interact. Yesterday we were talking about their innovation process.
We surveyed about 100 people about the organisation’s effectiveness in managing the innovation value chain. The innovation value chain looks at how effective you are at generating ideas, selecting and testing ideas, and getting ideas to spread. I’ve pictured it previously like this:
In order to innovate effectively, you need to be good at all three parts of the process. Firms rarely suffer from a lack of ideas, and our partner is the same. The part of the process that they are the worst at is selecting and testing ideas. These are some of the questions on which they scored particularly poorly:
- It takes too long to develop novel project solutions to the point where they can be used.
- We do not have the time to develop innovative ideas for potential reuse outside of the project they were invented on.
- We have a risk-averse attitude towards trying novel project solutions.
The irony of this situation is that they have invested a fair bit of money into a software package which has the primary purpose of helping them with exactly this step in the process.
As I discussed this with our contact, she looked at the survey results, then she said “You know, none of those things are problems that can be solved with technology.”
I thought that this was a fantastic piece of insight.
A big part of the problem here is that they invested in a tool, and the expected the tool to solve their problem. Unfortunately, the tool doesn’t create more time for people, and it doesn’t increase their innovation skills. Their tool has moved them to the right on the Innovation Matrix, but it hasn’t moved them up it:
This is why the Innovation Matrix is useful – because tools and skills are two separate things. You can increase one without affecting the other. As Jeffrey Phillips wrote in a perceptive post today, innovation is the last people-centric process:
The fact is that people play a disproportionate role in innovation when compared to any other important function. That’s because, unlike many other processes, the work can’t be divided into simple tasks that can be automated by a computer or accelerated by inanimate processes. So here’s the important question: if people play such a vital role in innovation, why do we starve innovation of the best people in the organization? If people are so vital to innovation, why do we intentionally limit the amount of time we allow for innovators to work?
There are a few key lessons in this:
- Innovation tools and innovation skills are two separate things: people often think that they can solve their innovation problems simply by finding the right tool. This is rarely true. In general, to improve innovation you have to improve skills and capabilities. Tools can be used to facilitate this process, but they can’t do it on their own.
- One of the biggest obstacles to innovation is lack of time: if innovation is important, people need the time and space to work on developing, testing, and spreading new ideas. If you are a manager and you want your people to be more innovative, you have to give them the time needed to do this.
- Tools don’t solve problems, people do: this is why innovation is still people-centric. It’s more important to remove obstacles to innovation than it is to give people tools.
There’s no magic bullet here, no perfect tool. So stop looking for one. Instead, start experimenting. Find the things that work, and scale these up.
Forget Products – Think Ecosystems
Posted by John in innovation on 15 February 2011
A colleague has just forwarded the brilliant ‘burning platform’ memo from Nokia CEO, Stephen Elop. If you haven’t read the entire memo to Nokia employees, you can link to a report here. It’s a brutal self-assessment that could be a turning point for Nokia. Learning often starts with a statement of “I don’t know” and the memo is not only an ‘aha’ moment for Elop but also an insight for the future of competitive strategy.
Elop talks about Nokia’s misguided focus on a product, which has resulted in them being outcompeted by entire ‘ecosytems’. These are value-creating networks of buyers, suppliers, related businesses and even competitors.
The battle of devices has now become a war of ecosystems, where ecosystems include not only the hardware and software of the device, but developers, applications, ecommerce, advertising, search, social applications, location-based services, unified communications and many other things. Our competitors aren’t taking our market share with devices; they are taking our market share with an entire ecosystem. This means we’re going to have to decide how we either build, catalyse or join an ecosystem.
It’s not about the product, it’s all about being part of a rapidly evolving ecosystem. This game is won by having the fastest-growing ecosytem. Traditional strategy theory talks about an internal focus on products with barriers to competition. Elop has defined the nature of 21st century competitive strategy. He talks about the Apple ecosystem, but there is a warning here for Apple as well. Apple lost its first ecosystem game with the PC and Apple software and history may yet repeat itself.
For example, there is intense heat coming from our competitors, more rapidly than we ever expected. Apple disrupted the market by redefining the smartphone and attracting developers to a closed, but very powerful ecosystem.
The new game of ecosytems in this industry could be won by Android. Elop highlight how their ecosystem has delivered rapid and profitable growth.
And then, there is Android. In about two years, Android created a platform that attracts application developers, service providers and hardware manufacturers. Android came in at the high-end, they are now winning the mid-range, and quickly they are going downstream to phones under €100. Google has become a gravitational force, drawing much of the industry’s innovation to its core.
I don’t think the ecosytem game is restricted to the telco industry. It reflects a trend away from the vertically integrated behmoth firms of the 20th century towards more nimble value-creating networks. What industries, do you think, could compete on ecosytems?
(Note from Tim: Esko Kilpi has an excellent post on a similar topic, including further links – I recommend checking it out.)
For Inspiration, Look Everywhere Else
I just ordered a book called The Art of Game Design by Jesse Schell. There are some downloadable sample chapters on the site, and one of the stories in the first one sold me on the book.
Schell talks about the first juggler’s festival that he went to when he was learning how to juggle, and how one guy in particular caught his attention:
He used patterns and rhythms that were unique, and his tricks, though not astonishing in their difficulty, were simply beautiful to watch. I had to watch a long time before I realized that some of the tricks that seemed so special and unique when he did them were things I could already do — but when
he did them they had such a different style, a different feeling, that they seemed like something completely new. I watched him for about twenty minutes, and suddenly he looked at me, and said “ Well? ”
“ Well, what? ” I said, kind of embarrassed.
“ Aren’t you going to try to copy me? ”
“ I — I don’t think I would know how, ” I stammered out.
He laughed. “ Yeah, they never can. Know why my tricks look so different? ”
“ Uh, practice? ” I managed.
“ No — everybody practices. Look around! They’re all practicing. No, my tricks look different because of where I get them. These guys, they get their tricks from each other. Which is fine — you can learn a lot that way. But it will never make you stand out. ”
I thought about it. “ So where do you get them? ” I asked. “ Books? ”
“ Ha! Books. That’s a good one. No, not books. You wanna know the secret? ”
“ Sure. ”
“ The secret is: don’t look to other jugglers for inspiration — look everywhere else. ”
This is a great innovation lesson. To be genuinely unique, to stand out from everyone else that is trying to do what you do, you need to have novel ideas. And novel ideas usually come from connecting things in unique ways – connecting ideas is the fundamental creative act in innovation.
The juggler that Schell was talking to did routines inspired by watching ballet, by seeing a flock of geese take off, and by observing a paper punch machine. None of them came from watching other jugglers. And when people tried to copy him, they might be able to replicate the moves, but without having the original inspiration in their heads, the routines never looked the same.
Having a great depth of knowledge in your field is an essential part of innovating. But depth alone isn’t enough. You need to find these weird connections to come up with unique ideas.
We’ve talked before about some techniques for getting outside of your normal routine in order to make these kinds of connections.
But the key lesson is this – to innovate in a particular industry, for inspiration look everywhere else.
(picture from flickr/Dark Botxy under a Creative Commons License)
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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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