I’ve been reading a lot of things from Umair Haque recently, and there he has some ideas that are definitely worth exploring. This is a talk that he gave last year which outlines several of his major themes. It is 20 minutes long, and well worth the time:

Umair Haque at BRITE ’09 conference from Center Global Brand Leadership on Vimeo.

Haque emphasises the importance of creating thick value. Thick value comes from innovations that have authenticity (they create genuine value for people), and that are also sustainable. Here is an example of thin value – in 2007, Comcast increased revenues by 12%, net income by 175%, and their stock price increased by 50%. While all this was happening, customer satisfaction – already among the lowest in an industry not noted for customer service in the first place – fell by 7%. These kinds of numbers are not sustainable.

To create thick value, he says that we need to focus on Behavioural Innovation, which he places at the top of a ladder going from technological innovation through process, product & service, business model and institutional innovation.

What he means by behavioural innovation is reconceiving the costs and benefits that we are responding to when we innovate and interact with our customers and partners. This creates a framework we can use to move beyond only responding to profit opportunities, or to game-theoretic competition. In some ways this approach is similar to triple-bottom-line methods – it involves taking into account the long-term needs of our partners, taking care of the resources that go into creating our products and services, and demonstrating genuine leadership. The result of this is building value that lasts. In the Comcast example, it means starting by using the customer satisfaction numbers as the target that you are managing, not the stock price. At least for starters…

So what does this mean in practical terms? There are some clues in some of Haque’s earlier work. He has several substantial resources available for free from his website bubblegeneration.com. His 2004 piece, The New Economics of Media is a 107 slide powerpoint presentation, which is essentially a free e-book. Like the talk, it is well worth reading, and thinking about. It is one of the sharpest analyses of the economics underlying some of the recent issues that have occurred across the music, news and publishing industries. In this he argues that the blockbuster model of creating content creates thin value, because there is very little financial motivation to improve quality.

Instead, he recommends creating micromedia. This is content that is tailored to the specific needs of smaller groups of people. This takes advantage of the fact that media are actually consumed in a networked manner – our media consumption is complementary. I don’t just read and think about things in a vacuum. I write about the things that are interesting, and link to them here in the blog, I tweet about them, I cite them in articles – I basically spend a lot of time trying to help ideas to spread. I also use these ideas to help build my own ideas, so that they’ll spread too.

As everyone follows similar paths, we influence each other. This creates snowball effects, and increasing returns. If we follow this model, the motivation for increasing quality is actually very high – because the better we are at connecting up the ideas that we run across, the better our own ideas will be, and the more likely they’ll be to spread.

I’m obviously oversimplifying a very sophisticated argument for the sake of brevity. But I think that there are a couple of critical points here as we extend this approach beyond media. One is that when we are innovating (creating new connections), we need to take time into account. Is our innovation sustainable? The second point is that we need to adopt business models that create genuine, lasting value for our economic partners. This requires us to change the way we think about costs and benefits. It requires behavioural innovation.