Tag: Australia

All of Our Innovation Barriers Are Self-Inflicted – Reflections on the Drucker Forum
What should management look like today – and tomorrow?

I just got back to Australia from the 6th Global Drucker Forum that took place over the weekend, where these two questions (and others!) were addressed. Drucker was a great thinker, and one of his pieces inspired the title for this blog – so I was excited to go to the event. Richard Straub and his team put together a great event this year. I learned a lot, and, more importantly, got to spend some time with some awesome people over the days that I was there. Here are some of my thoughts triggered by the event.

Highlights from the Sessions

I liked a lot of the things that happened during the formal presentations:

Clayton Christensen gets off the stage to watch Roger Martin: my favourite moment on day one came when Clay Christensen walked off the main stage so that he could see Roger Martin’s talk. This was also my favourite talk on the day – Martin was one of the few that talked more about what he’s working on now and his latest ideas, rather than going over his greatest hits (Pankaj Ghemawat was the other that did this). I loved Christensen’s move, because it showed respect for the ideas of others – it was generous, and set the tone for the rest of the Forum.

During the discussion after the first set of talks, Martin had a great quote on some of the issues around managing solely for shareholder value:

Every incredibly stupid theory has a core that sounds good.

The Creative Economy is here: Steve Denning, Dan Pontefract and Bill Fischer had a great session looking at how we’re making the transition to the Creative Economy: here’s Dan’s description of the session. One of the highlights here was the focus on actual examples of firms taking action to distribute leadership and build innovation.

$Dan Pontefract, me, and the gorgeous ceiling in the Hall of Sciences in Vienna$
Dan Pontefract, me, and the gorgeous ceiling in the Hall of Sciences in Vienna

Julia Kirby quotes Jim March: Julie Kirby opened the management and innovation session (the best one of the Forum) by quoting Jim March’s key idea on exploration versus exploitation. This is a core innovation idea – the responsibilities of management are split between exploring for new advantages, and exploiting existing ones. Balancing the two is tricky, and that’s one of key challenges in managing innovation.

The balance now needs to shift towards exploration: Rita Gunther McGrath talked about her research, which shows that the lifespan of competitive advantages is rapidly declining (a point that Nilofer Merchant returned to as well). McGrath cited research on what people report as barriers to innovation – then she said:

All of our barriers to innovation are self-inflicted.

Social isn’t just social media: Next up was Nilofer Merchant. I’ve seen plenty of talks by both McGrath and Merchant, since they are two of my favourite management thinkers, and I have to say that their talks at this event were by far the best I’ve seen from them. It was a great session. One highlight from Nilofer came when she stopped and asked us to “do something social for one minute.” Of course, very few of us tweeted – instead, we talked, and connected – leading her to say:

What we do to connect with each and build ideas – that’s social.

Nilofer kills it.

What does collaborative leadership look like? Herminia Ibarra gave a great talk on leadership. Her killer line was:

Our collective imagination has no real alternative to the heroic leader.

She then went on to discuss what collaborative leadership looks like in an effort to start building a more productive set of ideas on this topic.

Organisations should be flatter! In a talk that would have fit well in the Creative Economy session, Vineet Nayar discussed his experiences in making HCL Industries a flatter organisation. It was great to hear some of the issues in making flat organisations work – particularly since HCL wasn’t built that way, they had to reconfigure on the fly.

“Great ideas are great, but without execution they don’t work.”

It’s Not All About the Content

One thing that the Forum brought home for me is that we focus too much on content. The agenda was absolutely packed with talks. On the one hand, this was good because the lineup was awesome. On the other hand, this format also has some serious limitations. One is that when we’re hearing so many great ideas, we need time to discuss and reflect – we need to do those social things that Nilofer talked about.

It reminds me of my executive education courses. When people are new to lecturing, the tendency is to pack in as much content as possible. But over the years, I take out big chunks of content every time I deliver my innovation course, and that always makes it better.

We need to do this at conferences too – an idea I learned from Johnnie Moore.

Day one ended with a monster 2 hour session, and by then my attention was shot. So, while I got to meet John Hagel in person (yay!), I wasn’t able to give his talk the attention it deserved (boo!). However, meeting leads to my real highlights of the Forum, which were:
- Lunch on day one with Rita Gunther McGrath, Nilofer Merchant, Dan Pontefract and Jamison Steeve. The conversation was thought-provoking and fascinating. It was a great group too – Nilofer is a friend, Dan is a friend that I was meeting in person for the first time, I’ve admired Rita’s work for years, and I didn’t know Jamison at all before this, and he’s terrific too. Later, Rita and I both tweeted about the enormous value of meeting people face to face.
- Speaking of which, at lunch on day two I finally met Bill Fischer in person. Like Dan, he’s someone that I’ve been interacting with online for years. But it was wonderful to meet face to face. We’re hatching plots together now too.
- Many other personal encounters throughout the event were also memorable. Distance still matters. Interacting in person is expensive, time-consuming and causes a ton of jet-lag if you live in Australia – and it is completely worth paying the price to have the experience.
I meet Bill Fischer!

We need to build our events to take advantage of the magic that happens face to face. Content is fine, but it is only part of the story.

We Need More Jazz

My favourite part of the formal program was the end – the least scripted part of the event. We finished with eleven of the speakers coming up and giving a five minute summary of their reflections on the Forum, followed by a short Q&A with the editor of the Harvard Business Review and Chair of the Forum, the quick-witted Adi Ignatius. You can see Steve Denning’s summary here to get a flavour of them.

This was a great session. Some of the people struggled with it a bit, and ended up giving versions of their normal talking points. But the people that really engaged with the process were fantastic. They were thinking on their feet, and the whole session was exciting – no one knew what was going to happen next.

It was quite a contrast to many of the formal talks, which were exactly that – formal. Many of them were like classical music concerts – live versions of things we’ve heard many times before. Sometimes, this can be magic, but it can also be a bit stale. The final session was more like jazz – there was improvisation around a theme. This format is dangerous, because you can bomb. But it’s also more exciting, and, ultimately, more rewarding.

We need more jazz in our events.

And now I’m back in Australia. Tomorrow I give a talk of my own for the International CFO Forum in Sydney (check out the cool set of videos that we made for this).

I’m trying to figure out how to get more of the magic of social, and more jazz, into the event. That’s all part of figuring out what management should look like today – and tomorrow.
17 November 2014
Will Your New Idea Work?
The potential market for a great idea

One of my first consulting jobs was working for a company that had invented a waterless toilet. At the time, Australia was in a major drought, so this seemed like a pretty good invention. However, sales had been slow, and they had decided that they need to go international if they wanted to sell more.

So, where should they go?

They gave us the answer at the start of the project: China and India. How had they made that decision? An analysis of the market potential there. They had a guy that did a very extensive spreadsheet analysis of the market opportunities globally. It started with population, then made assumptions about how many people needed toilets and many other variables – around 27 in all. The only problem was that each of those 27 lines just multiplied or divided the original numbers by a constant – which meant that the final rankings were exactly proportional to the first variable – population. So – India and China were the targets.

The story that went with this made sense too. At the time, only about 60% of the people in both countries had access to any kind of working toilet (and this included fairly primitive technology like pit toilets). The need for clean sanitation was enormous, the potential health outcomes were good, the humanitarian argument was strong.

Our job was to figure out how to sell their toilets in India and China, because they hadn’t had much success so far.

The first thing that I did was try to make those market estimates more accurate. I did a lot of work get a more realistic estimate of the addressable market, and in the end, I thought I did a pretty good job.

This was a classic top-down market analysis. You gather data about what people have and what they need, get a sense of the market trends, figure out how big the market is, and calculate how much of a share of that market you can take. If the numbers look good, go for it.

For the toilet guys, the numbers looked good, so they went for it.

And completely failed.

What do people need?

I knew that the project was doomed from the minute I started on it – but my failing was that I couldn’t get the scope of the project changed. The problem is pretty obvious. The reason that 40% of people in India and China didn’t have access to clean sanitation isn’t because they had some kind of toilet shortage, and were just waiting for a waterless toilet to show up.

The problem was money. People that couldn’t afford $25 for a pit toilet certainly couldn’t afford lots more than that for a fancy waterless one.

The problem with the project is that no one involved with had gotten onto the ground and found out what people really needed – a more bottom-up approach to finding your market.

Top down or bottom up?

We’re currently working on our collaboration with the Wharton Business School as part of their Global Consulting Practicum program, and the question of top down versus bottom market analysis came up. Len Lodish, the founder of the program is here, and we had a chat about this with one of our student teams.

Len tied the answer to the Ansoff Matrix – it looks like this:

It looks at products and markets, and asks whether you’re looking at existing or new ones. You can use these quadrants to think about how to make your new idea work:
1. Existing product in an existing market – the goal is market penetration. Here, we can use top-down approaches to see if your new idea will work. We know the size of the market and we’re just trying to get more of it.
2. New product in an existing market – the goal is product development. We can use top-down analysis here as well. Again, we know about the size of the market, and we should have a reasonable idea of what people need.
3. Existing product in a new market – the goal is market development. Here is where the top-down analysis approach starts to fail. This is where the toilet project was working. It failed because we didn’t understand what the new market needed, or whether it would even value the product that we trying to bring in.
4. New product in a new market – the goal is diversification. In this quadrant, top-down analysis can tell you that the market might be attractive, but it is nearly impossible to go into this situation without having a good bottom-up understanding of what people need.
The real issue that Len and I were running into is that top-down market evaluation is a lot easier to do. Our team wanted to test markets for our client through research, not through talking with people. That’s the mistake that we made on our toilet project – and it’s incredibly common.

When going into new markets, get out of the building

The key point here is that when you are entering new markets, you can’t figure out if your idea will work or not just through desk research. You have to get out of the building – that is why this is such a critical part of the lean start-up process.

Start-ups run into this problem when they get hung up on features, not the value that they’re creating. Most start-ups are trying to launch a new product into a new market – so they have to talk to people to gain a genuine understanding of their needs.

The problem is different in big companies. They regularly send new products into existing markets, where the top-down approach works well. But then they look to new markets, they try to use the same approach. This leads to failure.

Ben Yoskovitz wrote a great post today on how to use the lean start-up principles to get around this problem in established firms. If we had gotten out of the building and talked to people in India and China, we would have learned that the water-free toilets would not work yet. My suspicion is that if we had talked to people in, say, California, that there was a clear need for the product there.

To figure out if our new idea will work, we need to understand what people need. If you have a good match between this and what you’re offering, then you’ll have a chance.
15 January 2014
Don’t Set Goals, Make New Habits Instead
How I Became Large

“Double cheeseburger, no pickles, no ketchup, in a value meal, upsized, with a pepsi.”

That was my lunch order nearly every day at Burger King after we moved to New Zealand. The “no pickles, no ketchup” part was interesting – that was the easiest way to order a burger with only mustard. The BK point-of-sales system didn’t have a key for “only mustard” – instead, it had keys for what to exclude – “no pickles” and “no ketchup.”

One time I asked for a double cheeseburger with mustard only, and the response was “<pause> So… no burger, no bun?” That’s when I figured out I had to learn how to speak Burger King.

Anyway, the point is, that after 3.5 years of this, I had put on 50 pounds or so. Well, since I was in New Zealand, I had put on 23 kg or so.

I had gotten into a bad habit.

How I Became Less Large

When we moved to Australia, I got a new job, but that terrible lunch habit persisted.

Eventually, I said enough is enough. My goal for several years had been to lose weight, but nothing happened until I changed my habits. I changed what I ate. Lunches were now salads, I cut out soft drinks, more exercise and so on – there aren’t really any secrets to this. Over the course of a year, I dropped about 30 kg, and I’ve kept most of that off for ten years now.

Now I have better habits.

As Neil Perkin succinctly puts it: systems trump goals.

What New Habit Will You Build?

While the human body is a complex system, weight it still a relatively straightforward input-output process. So we can address it through habits. Charles Duhigg wrote a great book on how to break bad habits and build better ones – The Power of Habit. Here is his flow chart for building habits (click on the image to see it full-size):

The problem with goals is that most of them are too big, and they take a long time, and that requires work. That’s also what makes them worthwhile! But on a day-to-day basis, you need to figure out how to build the habits that will eventually get you to your goals.

If your goal is to lose weight, you need to change your eating (input) and exercise (output) habits.

If your goal is to write a book, you need to change your writing habits.

Austin Kleon wrote a great post yesterday on breaking goals down into habits. He says to do something small, every day:

Figure out what your little daily chunk of work is, and every day, no matter what, make sure it gets done.

Don’t say you don’t have enough time. We’re all busy, but we all get 24 hours a day. People often ask me, “How do you find the time for the work?” And I answer, “I look for it.” You find time the same place you find spare change: in the nooks and crannies. You find it in the cracks between the big stuff—your commute, your lunch break, the few hours after your kids go to bed. You might have to miss an episode of your favorite TV show, you might have to miss an hour of sleep, but you can find the time to work if you look for it.

What I usually recommend: get up early. Get up early and work for a couple hours on the thing you really care about. When you’re done, go about your day…

Do the work every day. Fill the boxes on your calendar. Don’t break the chain.

This approach works pretty well for most of our personal goals. But what if our goal is to make our organisations more innovative?

That’s a bit trickier. The main reason is that innovation is a lot more complex. Complex systems are trickier because they require us to approach our goals indirectly. This excerpt from John Kay’s terrific book Obliquity outlines the issue:

If you want to go in one direction, the best route may involve going in the other. Paradoxical as it sounds, goals are more likely to be achieved when pursued indirectly. So the most profitable companies are not the most profit-oriented, and the happiest people are not those who make happiness their main aim. The name of this idea? Obliquity.

…

What is true of forests is equally true of businesses. The great corporations of the modern world were not built by people whose overriding interest was wealth, profit, or shareholder value. To paraphrase Mill: their focus was on business followed not as a means, but as itself an ideal end. Aiming thus at something else, they found profit by the way.

This is how Hewlett Packard described it: “Profit is a cornerstone of what we do… but it has never been the point in and of itself. The point, in fact, is to win, and winning is judged in the eyes of the customer and by doing something you can be proud of.”

Obliquity is relevant whenever complex systems evolve in an uncertain environment, and whenever the effect of our actions depends on the ways in which others respond to them.

Innovation is another thing that we need to approach obliquely. So what habits should we build to help? Here are some ideas that I’ve run across in the past couple of days:
- Take care of yourself. Jason Cohen points out that we are happier and more productive when we get enough sleep, exercise, and take time to think.
- Practice divergent thinking. It’s a mistake to jump straight to solutions when we’re trying to innovate. First, we have to explore a broad range of ideas. Olaf Kowalik writes about how to use divergent thinking to do this – and this is a key innovation skill.
- Read widely. Jorge Barba makes an important point at the end of his post recommending some innovation books to read:
  
  One more thing: everything is connected in some way, so read about anything and everything. Not just books that have “innovation” in the title.
  
  Yes – definitely do that.
To innovate, you need the process, but you also need to muddle your way through a bit. So some of the habits you need to build are oblique – like getting enough sleep. Others are more direct, like blocking out time for thinking and allocating resources for building your ideas.

The main point is that things that are worth doing take effort over an extended period of time. You need to build habits that will ensure that you make that effort.

As we hit the new year, don’t set goals – start building new habits instead.

Related articles
- 7 Healthy Habits for Entrepreneurs
31 December 2013
This Might Not Work

The Most Important Phrase in Innovation

What’s the most important phrase in innovation?

You could make the case for “That’s interesting.” Lots of great ideas start with curiousity. If you want to become more innovative, increasing your awareness of what’s going on around you is a great way to start. And when you find interesting things, you can start to learn more about them.

Another candidate is “That really bugs me.” We know that a lot of innovation is irritation-based. When things don’t work right, we want to fix them. It’s an important innovation driver.

My vote for the Most Important Phrase in Innovation goes to “This might not work.” You can’t innovate without saying this. If there’s not a measurable chance that your idea won’t work, then it’s not new.

That’s the back of the bonus book that was part of Seth Godin’s kickstarter project last year (for an interesting discussion of that, see this from Dan Blank, and his follow-up interview with Godin). It referred to a few things – the idea of making a 1200 page book out of blog posts, and raising money to fund a book through kickstarter, and launching it without publisher or media support, etc.

Godin has been consistently running experiments over the past few years (like the kickstarter campaign, and The Domino Project), trying to figure out what the next business model for publishing might be. Here is a clip from his blog post today, talking about the blockbuster mentality in Hollywood:

But since they pay so much, they have no choice, they think, but to say, “This must work!” So they polish off the edges, follow the widely-known secret formula and create banality. No glory, it seems, with guts.

Every meeting is about avoiding coming anywhere near the sentence, “this might not work,” and instead giving ammunition to the groupthink belief that this must work.

And as soon as you do that, you’ve guaranteed it won’t.

If you think that it must work, you’ve guaranteed it won’t.

In other words, you can’t innovate without saying “This might not work.”

The Key to Innovation is Experimenting

Journalism is in turmoil right now – no one has any idea what the next business will look like. It seems like the the big publishers and news firms will only try out ideas they believe must work. And so, they don’t.

When faced with a high level of uncertainty like this, we must experiment. I saw a great example of this today in an inspiring talk by Mia Freedman. She talked about being named editor of Cosmopolitan Australia at the age of 24, and how she eventually left that position. After a brief foray into television, she started a blog – mamamia.com.au (you can hear or read the full story in this interview with Timbo Reid). Mamamia is now one of the most popular websites in Australia.

It all sounds pretty straightforward, right?

Not really. Freedman did a great job of then explaining all of the challenges she faced in building the site, the points where it might have did, and some of the doubts that she had as she went along. It became clear that all the way through, “this might not work” was very real.

If you think about, the idea of leaving the position of Editor of Cosmopolitan, Cleo and Dolly to start a blog would have sounded insane when Freedman did it. And yet, she that’s what she did. And now, she might be figuring out what the next business model for media looks like.

The Flipside to “This Might Not Work”

Why are we willing to try things when this might not work?

Because it might work.

The only way to change things is to try things that might not work. This, of course, does not guarantee that things will work out – your idea might be truly nuts, or impossible. But we have to aim high. The reward when we do is that this might work.

Innovation is challenging because to innovate we must seek out uncertainty. For most people, this isn’t comfortable – that’s why we don’t like “this might not work.” Nevertheless, if we want to do work that makes a difference, that’s where we need to be. To grow we have to try, stumble, and learn.

So give it a go. It might work.

7 November 2013