Tim Kastelle

Category: book riffs

  • You’re too Scared to Innovate

    One of the best live shows that I saw during my university days was Beat Happening and Girl Trouble. All of us were a long way from home in Washington when I saw them in New Jersey. While Beat Happening was playing what I thought was a pretty mesmerising show, my friend Tom leaned over to me and said ‘we could do that.’ I looked at him for a long time, then said ‘but we don’t, do we?’

    We didn’t then, and we don’t now. We don’t play like Beat Happening, we don’t do a lot of things that it seems like we could, if we just tried it. Calvin, Heather and Bret did not play complex music:

    and yet, there haven’t been many bands like them. Why not?

    Seth Godin says in his new book Linchpin that it’s because we’re afraid. His contention is that the way to be personally remarkable is to make art, and that it is within everyone’s capability to do this. Here’s his description of Fred Wilson and Jerry Colonna’s investment firm Flatiron Partners:

    …for five years, they returned profits and created companies like few other funds in history. After the fact, it seems obvious that this was a special moment in time, and that taking advantage of it was smart. But there, right then, it wasn’t obvious, it wasn’t easy, and there certainly wasn’t a manual. Anyone could have done, but anyone didn’t. They did.

    Godin’s explanation for why people don’t regularly create things that sets them apart, that makes them remarkable is fear. His idea is rooted in biology –

    The lizard is a physical part of your brain, the pre-historic lump near the brain stem that is responsible for fear and rage and reproductive drive. Why did the chicken cross the road? Because her lizard brain told her to.

    Want to know why so many companies can’t keep up with Apple? It’s because they compromise, have meetings, work to fit in, fear the critics and generally work to appease the lizard. Meetings are just one symptom of an organization run by the lizard brain. Late launches, middle of the road products and the rationalization that goes with them are others.

    This reminds me of the most common reason give me for why they aren’t innovative: their boss won’t let them be innovative. Or their company won’t. Or both. Or their industry isn’t innovative. It’s all the same excuse – I can’t innovate because I’m scared.

    Here’s the thing – if you really want to innovate, and there really isn’t any scope for you to do so in your current position, then you have to get a new job. Either that, or you have to figure out how much you can get away with, and try some things. Either way, you have to take action – now.

    Godin says that way to get around the problem is discipline. You have to practice overriding the fear. The more times you do this, the more self-confidence you gain, and the easier it gets. But it never gets easy – you always have to fight the fear. I know that I sure do.

    Here’s my prescription:

    1. Think about how much you can get away with – if you manage a budget, how much discretion to you have? If you don’t have a budget, what are the parts of your job that you control?
    2. Make a list of 10 things that you can do within the current scope of your work that will make things better for the people with whom you interact – customers, co-workers, bosses, whoever.
    3. Do those things.
    4. Figure out which ones worked, and those more.
    5. Figure out which ones didn’t work, learn why not, then forget about them.
    6. Focus on the ideas that went well – even if only one of them works, you just made your work a better place.

    The point with this is to just get started with innovation. Try things that are cheap experiments. Learn from failures, amplify successes. Try a lot of ideas at once so that you don’t get too attached to them – if you only have one idea, the stakes are much higher, even for a cheap and quick experiment.

    As you do this more, you’ll get better at it – you’ll build innovation skills. Linchpin is worth reading to find out how to start building these skills. If you get really, really good at thinking up and testing new ideas, then getting them to spread, your job will get more interesting, and you’ll have more opportunities. This means change, and that’s a big part of what causes the fear. But it’s also what provides the rewards.

    And if you get exceptionally good at all of this, you might make it look so effortless that anyone that watches you work will think that they can do it too – just like Beat Happening.

  • We Have to Connect Ideas to Connect to People

    How do we create value in a world of mash-ups, remixes and nested hyperlinks? As I keep arguing, we do it through connecting – connecting ideas together, and connecting ideas to people. This is one of the core ideas that Jaron Lanier gets at in his frustrating but good new book You Are Not a Gadget. Lanier is a significant figure in the computing world who has accomplished a great deal. He was one of the pioneers in virtual reality, and coined that phrase. He was sharing a house with Richard Stallman when Stallman hatched the idea for GNU, which ended up leading to Linux, among other things. He’s been right in the middle of a lot the technological advances that we’ve seen over the past 30 years – so when he talks about digital issues, it’s worthwhile to pay attention to him.

    You Are Not a Gadget builds on an argument that Lanier has been formulating for a while. The core ideas have been laid out in his essays One Half a Manifesto and Digital Maoism. The main theme is that Lanier takes issue with what he calls ‘cybernetic totalism’ – the key idea of which is:

    That biology and physics will merge with computer science (becoming biotechnology and nanotechnology), resulting in life and the physical universe becoming mercurial; achieving the supposed nature of computer software. Furthermore, all of this will happen very soon! Since computers are improving so quickly, they will overwhelm all the other cybernetic processes, like people, and will fundamentally change the nature of what’s going on in the familiar neighborhood of Earth at some moment when a new “criticality” is achieved- maybe in about the year 2020. To be a human after that moment will be either impossible or something very different than we now can know.

    To argue against this, he ends up arguing against a number of ideas that are currently popular, such as the discussion around the role of ‘free’ in business models, commons-based intellectual property initiatives, and the idea Moore’s Law will inevitably lead to a merging of computer science with, well, everything else.

    Many parts of the book strike me as just wrong. He mangles the discussion of Stewart Brand’s ‘information wants to be expensive… but it also wants to be free’ dichotomy in a way that seems willfully obtuse – I have a hard time believing that he doesn’t have a better understanding of that argument. And when he talks about problems with musicians trying to make money with digitally-based business models – he contrasts the current state of affairs with a romanticised past that never existed. For example, he says that current model serves kids in a van that are willing to drive around to play gigs reasonably well, but that this isn’t a sustainable career. When has that ever been? Every band I’ve ever loved has done that, and they’ve been doing it since at least the mid-60s?

    He then asks for examples of musicians that have succeeded with digitally-based promotion models. He discounts Jonathan Coulter because he has lowest-common denominator appeal (ummm, again like pretty much every single popular act for the past 40 years – that’s kind of the definition of ‘popular’) and then says he doesn’t know of any himself. Well, there are examples like Ani DiFranco and Kristin Hersh, and there also cumulative stats like the ones reported by the Times Online Lab, which show that in the UK, the share of music-generated revenue that goes to musicians rather than intermediaries has risen substantially over the past 5 years.

    I think that some of these issues weaken his overall argument. But the book still has a couple of extremely strong points. The first is that Lanier has a number of concrete recommendations, which could be tried. I’m not sure they’ll work, but for example, his ideas about creating standardised formats and reporting rules for financial instruments strike me as well thought out, and something that we really do need to try.

    And the core of his argument is exactly correct – we must have economic and creative systems that stimulate and reward the creation of new ideas. Open innovation only works when the organisations involved are creating their own ideas and contributing them to the mix. Mash-ups only work if there is something to mash-up in the first place. Lanier’s tagline is ‘You have to be somebody before you can share yourself’, and I think that this is exactly correct.

    When I talked about Howard Rheingold’s filtering strategies the other day I discussed his idea that it is not enough simply to aggregate and filter information – you have to do something with it. You have to connect ideas up in a novel way – this is the fundamental creative act. You have to connect ideas together. This is hard. It takes time, it requires talent, and you have to work at it to develop your skills. You have to put the hours in, and develop grit to go with your intelligence.

    Hutch Carpenter wrote a terrific post today about the importance of ideas. He used the example of what goes on within firms, saying:

    When I post an idea, I create the basis for finding others. That because when I post an idea, I’m making…

    A call for your interest

    Think about that. The act of publishing an idea is a broadcast across the organization. It’s a tentative query to see who else feels the same way. Or if not the same way, who has an interest that overlaps mine.

    This is unique to ideas. Ideas are potential. They are a change from the status quo. There are others who share at least some aspect of your idea. In large, distributed organizations, where are these people?!!

    Carpenter also quotes Brian Solis who says that “Ideas connect us more than relationships.”

    I think that these ideas are critical as we build our networks. We don’t just blog and tweet and link-in just for the sake of making connections. At least, we shouldn’t. We should do these things to share our ideas. We should build our network around our ideas.

    But to do that, we have to have some first. The value in Lanier’s book is in pointing this out. Before we can connect to people, we have to connect up ideas. That’s how we enrich those with whom we connect.

  • Innovation Lessons from The Checklist Manifesto

    How do we deal with complexity? A while ago I suggested that one strategy that we use to handle complexity is that we outsource some of the rote memorisation of facts and routines that we need regularly. This is essentially the strategy that Atul Gawande also advocates in his outstanding book The Checklist Manifesto: How to Get Things Right. The primary theme of the book is that one of the best tools we can use to handle complex situations is a very simple one – the checklist.

    The key story in the book is the World Health Organization’s development of a Safe Surgery Checklist. The checklist consists of a series of items to confirm as part of the surgery process. The are all fairly basic things, and they are put into three groups that are asked at three natural pause points in the surgery – before the anaesthetic is administered, before the first cut is made, and before the patient is taken from the operating room. They address very basic issues that you would think wouldn’t be missed, but which often are: confirm that patient’s name, confirm which side of the body the surgery will take place, confirm the procedure, ensure that all surgery team members have introduced themselves by name and role, discuss key concerns for patient recovery, and several others.

    After the checklist was developed, WHO tested in eight hosptials around the world – four were in developed countries, and four were in developing countries. They ran the gamut from well-funded hospitals with all mod cons to rural hospitals that had so few resources that they had to sterilize and re-use surgical gloves until they wore out. In the test study, they gathered data from about 4,000 surgery patients across all eight hospitals for three months, then they introduced the checklists into the surgical procedures, and gathered data from another 4,000 operations.

    The results are astonishing. Major post-surgical complications fell 36% with the use of the checklist, deaths were down 47%. All eight hospitals saw major reductions in both categories, and from a statistics standpoint, the relationships are statistically significant. The outcomes were published in the New England Journal of Medicine at the start of 2009.

    Gawande is a terrific writer, and I recommend the book highly (his earlier books Complications and Better are also great). I think there are several things that we can learn about innovation from this story, including:

    • Behavioural innovation is at least as important as product innovation – probably moreso. Drug companies make a pretty big deal out of new discoveries that have statistically significant impacts of 1 or 2% on their target – what would happen if they had a drug that reduced the incidence of an important problem by over 40%? It would be all over the news, and it would be hailed as one of the biggest breakthroughs in medical history. We’ve seen products with even bigger impacts – for example, the polio vaccine. However, the idea that we can reduce the incidence of several major categories of surgical complications simply by acting differently is mind-boggling.
    • So why haven’t we heard more about this? People often resist simple solutions to complex problems. Gawande believes that this is because many people think that relying on things like checklists reduces their autonomy, and their ability to act creatively. Gawande’s response:

      It’s ludicrous, though, to suppose that checklists are going to do away with the need for courage, wits, and improvisation. The work of medicine is too intricate and individual for that: good clinicians will not be able to dispense with expert audacity. Yet we should also be redy to accept the virtues of regimentation.

      Like I said at the start – checklists are great because they allow us to outsource some complexity. This means that we don’t have to think about the basic things, leaving more time and brain resources to deal with the things that genuinely require our skill and judgement.

    • We do not interrogate our failures very well. The first step in building an effective checklist is to find the ways that we commonly screw up, look for systematic patterns, and put steps in the checklist to address these common problems. Checklists have been most widely adopted so far in industries where failures are closely examined – flying and construction. When a plane crashes or a building collapses, a lot of effort goes into learning why, and how to prevent the problem in the future. Once we learn the cause of the failure, the checklist helps prevent its reoccurance.

    The application of these ideas to innovation is fairly obvious. When you look at innovation as an evolutionary process, it quickly becomes apparent that a number of ideas need to be selected out before we invest too much into them. Most organisations do not spend too much time thinking about the ideas that didn’t work. One of the things that we need to get better at is learning from our ideas that fail. If we do this, then we can build a checklist.

    Gawande has a couple of business examples in the book. He talks about three investment firms that have developed checklists to help them evaluate investment opportunities. And he talks about a study by Geoff Smart that looked at what made Venture Capitalists most effective:

    Smart specifically studies how such people made their most difficult decision in judging whether to give an entrepreneur money or not. You would think that this would be whether the entrepreneur’s idea is actually a good one. But finding a good idea is apparently not all that hard. Finding an entrepreneur who can execute a good idea is another matter entirely. One needs a person who can take an idea from proposal to reality, work the long hours, build a team, handle the pressures and the setbacks, manage technical and people problems alike, and stick with the effort for years on end without getting distracted or going insane. Such people are rare and extremely hard to spot.

    Which VCs are most successful? According to Smart’s study, the ones that use a checklist. Checklists are simple tools that can help us filter ideas and opportunities. They help us outsource complexity, leaving us more mental capacity to connect up ideas in novel ways – which is the key to innovation.

  • Grit versus Intelligence in Innovation

    When I was younger, I placed a high value on intelligence. It made sense, since I was reasonably smart. However, it wasn’t until I added some grit that I started to really get things done. Up until my university years, most things came pretty easily to me. I was fortunate in that I was able to concentrate and learn a lot about things that interested me, so almost by accident there were some things that I ended up building some skills in. But it wasn’t until university that I started having to make the conscious decision to work harder, and do things that weren’t immediately fun if I wanted to get anywhere.

    The summer after my first year, I got a job as a floor hand in a feed mill. It was really hard work. For the first couple of weeks, I could barely drag myself home at the end of each day – I felt broken. At the end of those two weeks, my boss Doug called me and the other new floor hand in, and chewed us out pretty comprehensively. The basic message was that we had to work a whole lot harder, or he’d get rid of us.

    My first impulse was to tell him to screw himself. I was working harder than I ever had before – I had no idea even where to begin. I went home and talked about it with my Dad. He agreed with me that it didn’t seem fair. But then I started thinking about what it would mean if I quit. What if I didn’t find another job? I had to make money over the summer as part of my scholarship arrangements. After a lot of thought, I went in the next morning and asked Doug for some specific suggestions that I could follow to get better. He gave some, and I discovered that I could indeed work harder than I had been.

    That’s when I got some grit. It still took a long time for me to get better at digging in and working at things, but I’m getting there, slowly.

    I bring this up because Julien Smith highlighted an excellent article yesterday by Jonah Lehrer in the Boston Globe on the issue of grit versus intelligence. Lehrer starts by discussing a stream of research from psychologists that has shown in many cases, grit accounts for success more than intelligence does. It starts by talking about the story of Isaac Newton and the falling apple:

    There is something appealing about such narratives. They reduce the scientific process to a sudden epiphany: There is no sweat or toil, just a new idea, produced by a genius. Everybody knows that things fall – it took Newton to explain why.

    Unfortunately, the story of the apple is almost certainly false; Voltaire probably made it up. Even if Newton started thinking about gravity in 1666, it took him years of painstaking work before he understood it. He filled entire vellum notebooks with his scribbles and spent weeks recording the exact movements of a pendulum. (It made, on average, 1,512 ticks per hour.) The discovery of gravity, in other words, wasn’t a flash of insight – it required decades of effort, which is one of the reasons Newton didn’t publish his theory until 1687, in the “Principia.”

    I think that this is a critical issue for innovation. We’ve talked a lot about the gaps that are common between inventing something and the idea actually getting embedded in the economy – there are several examples here, and a discussion of Edison and the light bulb also illustrates the point. Randy Haykin talks about another great example by showing how many of the features in the new iPad from Apple originated in the Navigator – a prototype the firm made in 1987.

    You have to have intelligence to come up with these great ideas, but you have to have grit to get them to spread. It’s not an either or situation – one way or another, you need both. As Lehrer says, the genius idea is attractive, because it doesn’t require nearly as much effort. But the simple fact of the matter is that to successfully innovate, we need perseverance. Execution is at least as important as ideas, probably more so.

    That’s why I think that Ignore Everybody and 39 Other Keys to Creativity by Hugh MacLeod is one of the best innovation books I’ve ever read. He talks about creativity not as inspiration, but as hard work. Here’s an excerpt from one of his 39 other keys ‘Dying Young is Overrated’:

    But the kid thinks it’s all about talent; he thinks it’s all about ‘potential’. He underestimates how much time, discipline and stamina also play their part. Sure, there are exceptions. But that is why we like their stories when we’re young. Because they are exceptional stories. And every kid with a guitar or a pen or a paintbrush or an idea for a new business wants to be exceptional. Every kid underestimates his competition, and overestimates his chances. Every kid is a sucker for the idea that there’s a way to make it without having to do the actual hard work.

    So the bars of West Hollywood and New York are awash with people throwing their lives away in the desperate hope of finding a shortcut, any shortcut. And a lot of them aren’t even young anymore; their B-plans having been washed away by Vodka & Tonics years ago.

    Meanwhile their competition is at home, working their asses off.

    Innovation is not about having great ideas. It is about having great ideas, and getting them to spread. You need both grit and intelligence to do this. If you need some more grit, I can put in a good word for you with Doug at the feed mill…

    (Feed mill picture (not the one I worked at!) from flickr/rverspirit under a Creative Commons license)

  • Filtering, Crowdsourcing and Innovation

    How can we take advantage of the ‘wisdom of crowds’ in our innovation efforts? There are some distinct challenges in trying to do this. The basic idea is this: if you get a large number of people to estimate something – the weight of an ox, or the number of jellybeans in a jar, for example – usually the average of all of the estimates is closer to the actual number than any individual’s guess. Consequently, there is a strong argument for taking advantage of this phenomenon if you are trying to get a handle on estimating a particular number. Businesses have used these techniques to improve their sales forecasting for example (Gary Hamel includes a really nice example of how Best Buy used this method in The Future of Management).

    Can this work to improve innovation? It’s not as obvious that it will. I’m currently reading You Are Not a Gadget by Jaron Lanier (more on this book in a later post). Lanier has this to say about using crowds:

    The reason the collective can be valuable is precisely that its peaks of intelligence and stupidity are not the same as the ones usually displayed by individuals.

    What makes a market work, for instance, is the marriage of collective and individual intelligence. A marketplace can’t exist only on the basis of having prices determined by competition. It also needs entrepreneurs to come up with the products that are competing in the first place.

    Since the internet makes crowds more accessible, it would be beneficial to have a wide-ranging, clear set of rules explaining when the wisdom of crowds is likely to produce meaningful results… Among other safeguards, I would add that a crowd should never be allowed to frame its own questions, and its answers should never be more complicated than a single number of multiple choice answer.

    Crowds can be useful, but also dangerous. Nassim Nicholas Taleb says that crowdsourcing should be avoided in situations where the potential payoffs are very complex, and when we don’t know what the outcome probability distribution looks like. Unfortunately, this is precisely the case for most innovations.

    Relying on crowds can lead to innovation problems. Stefan Lindegaard identifies this as one of the common causes of open innovation failure (the comments on that post are worth reading too):

    Many companies start off with idea generation platforms hoping that external contributors will contribute with great ideas and/or technologies. Most do not deliver on the expectations as they get more trash than gold.

    And in a post that addresses some of the issues with crowdsourcing really nicely, Graham Horton says:

    In conclusion, customer idea portals as they are currently popularly advocated will produce limited results; they will only provide suggestions for solutions that are apparent to customers, given their level of expertise and self-knowledge.

    All this might suggest that we can’t use crowds to help innovation. However, I think that these two quotes suggest a possible way that we can still take advantage of crowds in our innovation efforts. One of the issues is that we often misunderstand how crowdsourcing actually works. The Lindegaard quote suggests that people think that we can turn to our crowd (customers, stakeholders, etc.) and just wait for the good ideas to roll in. This is in line with a common understanding of crowdsourced systems – people often talk about Linux, for example, as a process where thousands of people write bug fixes for the software, and all of these fixes get put into the program, making it better. This misses a critical step.

    That’s a diagram that I made last year to explain to some friends how icanhascheezburger.com works – but it explains Linux just as well as it explains lolcats. The critical step in the process is the middle one. Both systems crowdsource content – Linux crowdsources code, icanhascheezburger crowdsources cat drawings. The problem is, not all of the code works, and not all of the lolcats produce lols. In each case, there is a small group that filters the incoming content. We don’t have crowds creating stuff, and then voting on stuff. We have crowds creating stuff that answers questions posed by the group guiding the process. The answers that work are then selected by that group as well.

    This leads to the answer that both Lindegaard and Horton suggest: in order to get useful answers from crowds, we have to have good internal capacity ourselves. Crowdsourcing needs to be guided. To use the crowd in innovation, we need to set the questions. And we need to know enough to be able to figure out when the crowd is giving us good answers.

    A while ago I talked about using jams to select ideas. This process follows these principles. The questions being asked are set by the organisation, so the crowd is trying to address a specific problem. And the best answers are not just judged by popularity – there are several evaluation mechanisms that can be used. You can use the votes and go with the most popular. You can use the ideas that were most polarizing. You can take the ideas that are generated and plug them into whatever other system you use (stage/gate, gut feel, whatever).

    Crowdsourcing then is another tool that we can use in our aggregate, filter and connect strategies. In this case, the filtering is the critical step. If we don’t filter correctly, crowdsourcing simply aggregates, which by itself doesn’t help us much. And the aggregated crowdsourced answers need to be connected to questions that we know are important. Crowdsourcing is not a panacea, but it can be a useful innovation tool if we use it correctly.

    Graham Horton has written a terrific post that looks at which questions we should ask the crowd.

  • Low Tech Innovation

    At start of my innovation courses, students often think that if their organisation isn’t inventing iPads, then they clearly aren’t (and can’t be) innovative. I end up spending a lot of time trying to help them see the many opportunities available for innovation, even within industries that appear to be pretty tightly constrained. In many cases, innovating in these industries ends up being far more important than coming up with flashy new gadgets. If you’re one of the first people to get one of the new iPads, and it fails miserably, will your life be materially worse than it is right now? Probably not.

    Andrew Hargadon recounts an interesting story of failed low-tech innovation: construction companies in Florida introduced a new form of drywall, which has subsequently been found to be defective. The problem may affect as many as 100,000 homes, and the cost of replacing the drywall in all of them may run as high as $10 billion. Who pays is a bit of question too.

    The point that Hargadon makes is that innovation in a very low-tech field like construction materials can actually have much higher stakes attached to it than innovation in gadgets. That is one of the reasons that these industries are very un-innovative – the cost of getting things wrong is pretty high.

    Jeffrey Phillips, author of one of the best innovation blogs around, points out another reason that conservative industries don’t innovate – they often are heavily regulated. According to Phillips:

    Too often, the regulations become a “ceiling” for new products and services. Rather than dream up new products and services that customers need, then try to revise the regulations to fit those products, firms use the regulations as a hard and fast rule, never to be breached or violated. They are in a box of their own making and own choosing, and careful never to question the box. Again, disrupters are going to seek ways to make that box obsolete, and the interesting thing about most regulated firms is that they employ lobbyists, whose job it is to influence or change regulations. A truly innovative firm would identify products and services that met customer needs, then lobby for the changes necessary to implement those products, and force the rest of the industry to follow.

    Highly regulated industries are also often low-tech as well. The disenctives to innovation in these industries are substantial: the cost of getting things wrong is often enormously high; the stakes are much higher; regulations may make it difficult to bring in new ideas. So why try to innovate at all in these industries?

    Phillips’ post starts to get at the reason – the risks are high, but the potential payoffs are also huge. Here’s an example:

    There’s an excellent book on the history of shipping containers – it’s called The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger by Marc Levinson. The impact of containers has been gigantic. When they were introduced, they reduced shipping costs by over 60%. They quickly reduced the amount of labour needed to load and unload ships by over 95%! The first shipping containers were made in the 1920s, but Malcom McLean and his company McLean Industries did what Phillips suggests – he identified the customer need, and then fought regulations until containers went into widespread use in the mid 1950s.

    A shipping container is about as low as low-tech gets. The container is one of the primary drivers of the huge increase in international trade from the end of World War II to now – it’s impact has been greater than that of all the high tech gear that gets shipped around, greater than that of the WTO, greater than that of all of the international trade treaties that have been signed.

    What does this tell us? A couple of things:

    • It’s another great example of the difference between invention and innovation. The box itself was invented 30 years before “containerised shipping” actually got the idea to spread. It’s not enough to have the ideas, or even to show that they work – you have to get your ideas to spread.
    • Following directly from that, the big innovation isn’t in the low-tech shipping container, the innovation is in the business model built around the low-tech shipping container. The new business model includes the integration between the container, ships, trucks and eventually rail – a completely different value network. Revenue generation is different too – the cost-cutting through labour saving was unbelievable. All aspects of the shipping business model changed as containers became widespread.
    • As in the drywall example, changing the most basic part of the system had a substantial knock-on effect. When McLean started with containers, there was little innovation in the industry. It was highly regulated, and very comfortable – so people weren’t trying many new things. Almost all of the innovative focus was on the high-tech end – making faster ships, increasing the capacity of trucks, and so on. However, all of these innovations only introduced marginal time savings – the bottleneck was still on the docks. The simple container is the innovation that got around that problem.

    So here’s a question for you: what low-tech innovation opportunities are available to you? Particularly if you are in an industry with constraints, low-tech is probably the way to go. The challenge for the day is this – find the most basic part of your business model, and start thinking about innovations around that. This will often get you rethinking your entire business model. That’s what makes the stakes high, but it’s also what makes the potential payoffs high as well.

    (Photo from flickr/photohome_uk under a Creative Commons license)

  • What Would Google Do? by Jeff Jarvis

    The question of how to best adapt to the changes brought about by the internet is of key importance to all organisations that are in information-based industries. According to Jeff Jarvis in What Would Google Do?, the answer is fairly simple: do what Google would. Here is a video in which he outlines the argument in the book (this is from the same session of BRITE ’09 as Umair Haque’s talk that I discussed yesterday):

    Jeff Jarvis at BRITE ’09 conference from Center Global Brand Leadership on Vimeo.

    Jarvis, author of the blog buzzmachine.com, takes an interesting approach in this book. He infers a number of rules for acting more like Google, but he does this without having direct contact with the firm. Because he’s a very entertaining writer, this first half of the book is worth reading. However, in some ways it rehashes ground covered well by Chris Brogan and Julien Smith in Trust Agents (reviewed here), or David Weinberger in Small Pieces, Loosely Joined (reviewed here). The main ideas are that to succeed, you should join network and be a platform (both facilitated by the internet’s linking structure), give control to your customers instead of trying to retain it yourself, and build a business model based on serving niches. There are actually ten rules in the book, but those are the ones that I found most useful. Jarvis reduces these rules down to five in his tips for creating a Googlier you.

    For me, it is the second half of the book that recommends it. In this section Jarvis tries to build new business models based on his Google rules in nine different industry categories, including media, retail, manufacturing and public institutions. Each section has two to three examples, and this part of the book is just fantastic. The thing that I like about it is that Jarvis really puts his ideas to the test here – tackling a number of industries that would not obviously lend themselves to following Google rules like car manufacturing, power generation, and restaurants. It is a fascinating intellectual exercise, and I think that a lot of his ideas would be worth trying out. I recommend the book based on this section.

  • Everybody Should Read Ignore Everybody by Hugh MacLeod

    Do you want to know how to easily find success? If so, then you probably shouldn’t read Ignore Everybody and 39 Other Keys to Creativity by Hugh MacLeod. One of the themes of the book is that success is not easy. Creativity and Innovation are inherently threatening acts to many people, which makes new ides difficult to execute. And to do something novel requires you to put in a lot of hours so that you are uniquely good at something (i.e. build a craft!).

    MacLeod built his fame by drawing cartoons on the back of business cards. After doing this for a while, he started sharing them on his blog gapingvoid.com. Ignore Everybody talks about some of the things that MacLeod has learned while he learned his craft and got his ideas to spread. It’s a terrific book and I highly recommend it. You can read a big section of it on MacLeod’s website here.

    There are some pretty useful innovation lessons in the book too. Here’s one quote:

    Good ideas alter the power balance in relationships. That is why good ideas are always initially resisted. Good ideas come with a heavy burden, which is why so few people execute them. So few people can handle it.

    This picks up on several themes that we talk about here regularly. It is hard to get new ideas to spread, precisely because of this resistance. And in the end, the good ideas that do spread are the ones that are executed – which is the hard part.

    I get asked a lot “Your business card format is very simple. Aren’t you worried about somebody ripping you off?”
    Standard Answer: Only if they can draw more of them than me, better than me.
    What give the work its edge is the simple fact that I’ve spend years drawing them. I’ve drawn thousands. Tens of thousands of man-hours.
    So if somebody want to rip my idea off, go ahead. If somebody wants to overtake me in the Business Card Doodle Wars, go ahead. You’ve got many long years in front of you. And unlike me, you won’t be doing it for the joy of it.

    Craft, execution and effort. Not a glamorous formula, but it works.

    Here’s one more quote from his blog:

    Patience is a vir­tue. Things tend to hap­pen more slowly at big com­pa­nies, espe­cially the more edgy stuff. A lot more time and effort is nee­ded to corral your allies into cri­ti­cal mass. That’s just reality.

    A lot of people find themselves in positions where it is hard to get their innovative new ideas accepted. There is no easy way to get around this problem – you just have to work at it. But ultimately, that’s where the joy is. And that’s why we need to be working on ideas that matter.

  • Design Driven Disruption

    This morning I thought of yet another way to talk about the incremental-radical innovation spectrum. Incremental innovations help you do things better, while radical innovations help you do things differently. If you follow the prescriptions in most business books, even when talk about having a radical message, you will end up doing things better. Actually, in some cases, if you follow the prescriptions in business books, you’ll end up doing things worse – which is why you need to be a bit careful when you’re reading them. However, I’m currently reading Design Driven Innovation by Roberto Verganti – and if you follow the prescriptions in this book, you’ll end up doing things differently.

    Verganti’s book is unusually deep. There are an unusually large number of concepts in this book that are worth considering and acting upon, and I’ll discuss several of them over the next few days. Here is John Caddell’s description of the book:

    Verganti, a favorite of this blog, attacks one of the central mysteries of innovation–how can a company successfully create a product that is a radical break from the past, and which shows the way to a new future?

    We’ve seen these products at work. The mobile phone is one. The personal computer is another. We know that you can’t survey users to determine what these products will look like or what they should do. So how to create them?

    Verganti’s primary point is that to do this, you have to create new meanings with your innovations. When he talks about ‘design’, that is what he means – the creation of new meanings, not simply making things that look elegant and beautiful. In fact, he contends that the latter is now a baseline skill that all firms must have to stay in the game, rather than a source of competitive advantage:

    Look at a product that is sitting near you at this moment. Do you find it cool, sleek, and stylish? If so, you are acknowleding the ability of its manufacturer to interpret the trendiest standards of beauty in the market. Do you have the clear feeling that a designer has devised its shape, or that a manufacturer asked a design firm to create the product’s user interface or style? That is a clear sign that deisngers have completed their exercise – that the product is stylish, in line with the dominant language of the market – but that they have also been very conservative. This is simultaneously both the success and the failure of design as styling.
    If all companies invest in incremental design and if all do it the same way using the same languages, design loses its power to differentiate one firm from another. Like total quality management, this type of approach to design is mandatory – nothing more.
    The difference between [firms pursuing radical innovation of meaning] and their competitors is not in whether they pursue incremental innovaiton but in whether they invest in radical innovation: these firms periodically search for dramatically new meanings, but their competitors do not. The radical innovators know that meanings in the market alternate between periods of incremental change and periods of rapid and disruptive transition. They aim to ensure that they will lead these transitions and let their competitors suffer the consequences.

    Yesterday Graham Horton said that disruptive innovation is a fashion that is misunderstood and misused by most who talk about it. In general, I think that he is right, but I also think that Verganti is talking about disruptive innovation in a useful way.

    Anders Sundelin recently wrote an interesting post about disruptive innovation too. It included this talk by Scott Anthony:

    There is one point in that with which I strongly agree, but also one big hole in the argument. I fully agree that:

    Disruptive innovation will result in major changes but they don’t often rely on technical innovation, in fact many times the technology is quite trivial, it’s the business model, the way a company organizes and acts that drives disruption.

    I think that is unquestionably true. This is one of the things that Anthony talks about a lot, and he is absolutely correct. It’s a point that needs to be more broadly understood. However, I am less convinced by his presription for developing disruptive innovations. I think that starting with focus groups to identify unmet needs is probably not the best way to approach this.

    This diagram is from Design Driven Innovation, and I would argue that Anthony is talking about the top left quadrant here – innovations that are technologically radical, but which maintain the same meaning. If you start your innovation process with focus groups, it’s impossible to radically innovate the meaning of your innovation.

    Interestingly, both Anthony and Verganti discuss Nintendo’s Wii gamestation as a radical innovation. This reminds me a bit of the competing explanations of Honda’s success in America. The Boston Consulting Group studied the Honda case and concluded that it was an excellent example of well-executed strategy formulation and execution. Richard Pascale then revisited the case a few years later. Based on extensive interviews with the Honda executives involved, he concluded that the strategy was emergent, fairly random, and fortunate to have succeeded. To me, Anthony’s discussion of the Wii is like BCG’s explanation of Honda, while Verganti’s is more like Pascale’s.

    I find Verganti’s explanation of the Wii more compelling. Rather than it being a triumph of analysis, he describes it as:

    The Wii offered a radical change in meaning compared with its competitors. It was a physical experience to be played no with thumbs but with the entire body, using natural movements common to sports and vigorous games…. The Wii transformed what a console meant: from an immersion in a virtual world approachable only by niche experts into an active workout, in the real world, for everyone.

    The Wii was technologically inferior to the current Playstation and XBox consoles in terms of what were considered to be the key metrics – processor speed, and display resolution. However, by combining existing technologies (MEMS accelerometers and gaming consoles, both already in wide use in different industries) in a novel way, Nintendo created a radical innovation in meaning.

    Design Driven Innovation is a terrific book. I recommend it to anyone interested in managing innovation. There are aspects of it that will challenge your core beliefs, I think (there are parts that challenge mine, at least) – but that’s one of the things that I value in a book. And like I said, if you follow Verganti’s advice, you’ll end up doing things differently – and that’s what makes things interesting, right?

  • Innovation Diffusion in a Network

    Yesterday I talked about how the interconnectedness of our economic networks often makes it more difficult for new ideas to spread. Because our products and services are embedded within a value network, we not only have to get people excited about our innovation, we have to get others within the value network to unconnect from whatever they are currently doing before they can reconnect with us. I thought that an example might help make this process make more sense, and I ran across a great one in The Slow Pace of Fast Change by Bhaskar Chakravorti, a book that is built around the idea that diffusing innovation through networks is difficult. It’s a good book and worth checking out. The example that Chakravorti uses is the uptake of 56k modems in the middle 1990s.

    When the 56k modem was released, it was demonstrably better than the 28k modems that it was replacing. The modems were twice as fast, and the trade-off to get this extra speed was, well, nothing. It was simply a better product. However, one year after it was released, only 20% of new modems being sold were 56k, and after two years, that figure had only risen to 50%. Why weren’t people using the better product?

    I was using one. As soon as they came out I bought one, opened up my PC, took out my dreadfully slow 28.8k modem, and popped the the lightning-fast 56k modem into the slot. I was ready to roll! However, as usual, I was atypical.

    The problem was that the percentage of customers that just went out and bought a modem was extremely small. The vast majority of modems were packaged within new computers. This meant that the new 56k modems had to fit within the value network that included PC manufacturer/assemblers (OEMs), end users, internet service providers (ISPs), and, critically, two modem manufacturers (U.S. Robotics and Rockwell), which had two competing communication standards. And you only actually got 56k speed from your modem if it was on the same standard as the one used by your ISP. Here is how Chakravorti describes the choices facing everyone:

    Thanks to the competitiveness between the two standards, each participant had a critical binary choice. An OEM would slect a particular 56k modem if it expected that its users also wanted such a modem. But users would want these modems only if they delivered on the promise of higher speed. The ability of users to achieve speeds of 56k was, in turn, predicated on which standard their ISP was favoring. The ISPs would, on their part, favor whichever standard they believed would assure them of the largest customer base; in other words, they would back the modem standard that most OEM’s or PC distributers were likely to install in their machines. The outcome is that the market became a ring of interdependent decisions….The cycle created a self-sustaining equilibrium, in which the older technology persisted longer than it should have, give the state-of-the-art engineering. As a result, customer experience remained tethered to the status quo.

    And of course, DSL broadband modems were also just becoming available, which made the interdependent network choices even more challenging. What can we learn from all this? A few things:

    • I was lucky that my first 56k modem was compatible with my ISP’s modem.
    • More generally, though, this is a great illustration of why it simply isn’t sufficient to come up with a better product, service or way of doing things. You have to embed your innovation within the value network, and this presents an additional challenge. Why are many people still not connected at 56k? Why is your doctor using a PC with an i486 processor that isn’t networked with the broader healthcare system? Why are you typing on a QWERTY keyboard? It’s because the value networks for these systems are stuck, which prevents innovation. The interconnectedness of the value network leads to the lock-in of inferior technologies.
    • To get your innovation embedded into the economy, you have to unconnect the members of your value network from whatever they’re currently using (28k modems, for example), and get them to reconnect to you. The unconnecting is a critical step that we often ignore – this is a mistake.
    • This explains a significant part of why it takes so longer for new ideas to spread. You not only have to get people to agree that your idea is better, you also have to get them to act on this belief. That’s the hard part.

    Ralph Waldo Emerson was wrong when he said ‘build a better mousetrap, and the world will beat a path to your door.’ You have to build a better mousetrap, and then figure out a way to get it connected up within the mousetrap value network. That’s an entirely different problem. Solving it takes time, and that’s why innovation is different than invention, and why it takes so long for new ideas to spread.

    (Picture from flickr/patterbt under a Creative Commons license)

  • Ten Great Free e-Books for Innovators

    I hope that everyone is having a great holiday season. Whenever I make a new friend, one of the first things I usually do is buy them a book. I’m not exactly sure why – probably because I really value ideas & books, and I want to share them with people that I like. So for all my digital friends here, I thought that since it’s the holidays, I would give you links to a great set of books that are all downloadable for free.

    Books to help with Business Model Innovation

    One of things that creates opportunities for business model innovation is change in the environment – particularly in technology that creates platforms. The obvious platform technology driving change these days is the internet. I know that tech books tend to age poorly, but there are two that came out at the end of the 90s that I think are still essential reading.

    New Rules for the New Economy by Kevin Kelly: This book does a great job of identifying key generic issues about the internet. Kelly was writing about the the technology drivers towards free pricing back in 1997, as well as the importance of managing your business as a network, and even a good description of how fitness landscapes can help you build strategy. If you haven’t read it yet, you should.

    The Cluetrain Manifesto by Rick Levine, Christopher Locke, Doc Searles and David Weinberger: Takes a bit more of a marketing angle than New Rules, based around 95 theses for doing business effectively on the web. It starts with ‘Markets are conversations’ and builds from there.

    There are some more recent books that also help us figure out how to deal with the changes wrought by the web.

    The Wealth of Networks by Yochai Benkler: A more theoretical look at the network economy. Benkler talks about the impact that the web has on the economics of production and innovation, and then looks at the how this is leading to changes in politics and culture.

    Networks, Crowds & Markets: Reasoning About a Highly Connected World by David Easley and Jon Kleinberg: Economic value is created through networks. Benkler’s book lays out the case for this idea, and Easley and Kleinberg provide an excellent guide to actually analysing networks. This book is comprehensive and gives you an excellent grounding in social network analysis. The downloadable version is a pre-release copy, so I’m not sure how much longer it will be available.

    The Future of the Internet: And How to Stop It by Jonathan Zittrain: An excellent book which contrasts what Zittrain calls the generative web, which enables builders to make new things, and the closed web of proprietary technologies. He describes the main ideas in the book in this very entertaining talk:

    Intellectual Property

    The Public Domain by James Boyle: Boyle follows on from some of Zittrain’s arguments to address how the current intellectual property regime is broken. Copywrite and patents were designed to encourage the sharing of new ideas, but they are often now being used to prevent the generation of ideas. Boyle talks about how to correct this perverse situation.

    Against Intellectual Monopoly by Michele Boldrin and David Levine: Boyle’s approach is from the legal angle, and Boldrin & Levine look at the same issues from more of a game theoretic view. Both are worth reading.

    Getting Ideas to Spread

    Unleashing the Ideavirus by Seth Godin: Another classic, this time from Seth Godin. The basic thesis is that ideas that spread, win. Godin talks about a number of strategies that we can use to get our ideas to spread quickly and widely. (also check out Godin’s latest project What Matters Now)

    Intertwingle by Judy Breck: I actually haven’t read this one yet, so I can’t tell you too much about it. But it has an endorsement from Howard Rheingold, her blog is excellent, and it looks pretty interesting, so I think it’s worth giving it a go.

    I suppose there should be some Fiction too

    Makers by Cory Doctorow: If you want some fiction about innovation, this is a good one to read. An entire sci-fi book about business model innovation – what could be better?

    So there you have it – that ought to be enough to keep you out of trouble this holiday season. And hopefully these will give some great ideas to go out and execute in the new year. Enjoy! If you have any other suggestions, I’d love to hear them.

  • Innovation Lessons from A Better Pencil

    How do new ideas find their place in the economy? That is one of the issues that Dennis Baron addresses in his excellent book A Better Pencil: Readers, Writers and the Digital Revolution. There is an excellent interview with Baron on Salon in which he outlines the argument of the book:

    Historically, when the new communication device comes out, the reaction tends to be divided. Some people think it’s the best thing since sliced bread; other people fear it as the end of civilization as we know it. And most people take a wait and see attitude. And if it does something that they’re interested in, they pick up on it, if it doesn’t, they don’t buy into it.

    I start with Plato’s critique of writing where he says that if we depend on writing, we will lose the ability to remember things. Our memory will become weak. And he also criticizes writing because the written text is not interactive in the way spoken communication is. He also says that written words are essentially shadows of the things they represent. They’re not the thing itself. Of course we remember all this because Plato wrote it down — the ultimate irony.

    We hear a thousand objections of this sort throughout history: Thoreau objecting to the telegraph, because even though it speeds things up, people won’t have anything to say to one another. Then we have Samuel Morse, who invents the telegraph, objecting to the telephone because nothing important is ever going to be done over the telephone because there’s no way to preserve or record a phone conversation. There were complaints about typewriters making writing too mechanical, too distant — it disconnects the author from the words. That a pen and pencil connects you more directly with the page. And then with the computer, you have the whole range of “this is going to revolutionize everything” versus “this is going to destroy everything.”

    The book is well written and entertaining, but also very thought-provoking. Anyone that has been interested in the ‘is google making us stupid’ v. ‘everything bad is good for you’ debates should check it out.

    I think that the book has two key lessons in it for innovators. The first is embodied in the quote above – every innovation has to fight to find space for itself in the world. Plato was against writing. Writing! The point that Schumpeter was actually getting at when he talked about the innovation unleashing ‘gales of creative destruction’ was that even the most incremental new innovation replaces something. It is inevitable. A consequence of this is that every innovation will be fought, no matter how trivial it might be. Replacement means that someone loses – even if it is just people that dislike change. You have to take this into account when you come up with new ideas. Who does your idea threaten, and how will you deal with them?

    The second point is a bit more subtle. After talking about the history of people resisting new writing technologies, Barron spends the second half of the book talking about how the computer became a writing tool. One of the key turning points was conceptual – for a long time computers were only viewed as calculating machines. After all, ENIAC stood for Electronic Numerical Integrator and Calculator – there’s nothing there to suggest that you could write an email with it eventually. Computers weren’t a threat to typewriters as the primary tool for writers until the 1980s – trying to write on a mainframe system or a dedicated typing computer even then was a tedious task fraught with potential disaster. It took someone to actually re-purpose the number-crunching computer for word processing by writing software to do just that. Among others, IBM discounted the importance of this use, and that is in part why they missed out on the importance of PCs.

    This leads to the second lesson for innovators – the killer use of a new technology is often unclear for quite a while, and if you can figure out a way to re-purpose it, you have a chance to get out ahead of everyone. A big part of doing this is looking at the tools that we take for granted, and trying to imagine how they can be used in related but different domains – it’s the importance of making new connections again!

    A Better Pencil is a terrific book. And it contains two great lessons for innovators. First, not everyone will love your new idea, no matter how great it is, so you have to be ready to fight to get it to spread. Second, think about ways to re-purpose technologies that we take for granted.

    (Picture from Dennis Baron’s blog)