New Capitalism and New Business Models

There's interesting new territory to be explored for those of us keen to implement radical business ideas ...

This month seems to be dedicated to "Business Model Innovation".   There are suddenly serveral articles about this on the web, and it was also the focus of the latest issue of the Harvard Business Review.

Business Model Innovators argue very plausibly that any innovation ultimately becomes a commodity as our competitors catch-up, so we always need to stay one-step ahead to ensure our survival.  This philosophy affects not just what we sell, but also how we sell it.  And critically, we mustn't delay the development of innovations #2 and #3 just because operating profits from innovation #1 are still rising!

It's reasonably compelling I think, even from the scant summary above. 

So where can we look for visions of our future business models?   A regular PESTLE analysis can clearly help, but if we simply turn back a few pages in our now-well-thumbed Harvard Business Review issue, we find another source of inspiration:

Michael Porter's article "Creating Shared Value" argues that the business eco-system is seeing a gradual shift towards embedded behaviours which improve profits but also benefit consumers, employees and suppliers.

Over in the UK, Porter also appeared on BBC Radio 4's "In Business" programme this week, to make these same arguments.

He talked about three "levers" to create shared value:

1. Reinvent products which are good for consumers, instead of creating demand for bad products
2. Reduce wasted resource, thereby reducing cost and time, as well as environmental harm
3. Building businesses according to local "cluster" capabilities

The rise of the ethical consumer and the growth of  Generation 'G' will certainly have stimulated this shift.   Corporate Social Responsibility really didn't get to the heart of this new capitalism—it was more of a sticking plaster to protect companies and consumers whilst they developed more sympathetic sets of values.

Much of this thinking represents a reversion to the habits of some early industrial companies, which put enormous energy into the wider wellbeing of customers and employees.  Often this was stimulated by the beliefs of company owners who didn't feel beholden to shareholders.  But also, prior to the development of the advertising industry consumers just had more commonsense, and tended to spend greater proportions of their hard-earned cash on products which were actually good for them!

So it seems the time may be ripe for us to reconsider our business models along the lines of shared value.  Not only can we improve the lot of our customers (and let's hope they remember!) but we can also expect to improve our balance sheets, especially if we can reach a place our competitors haven't even dreamt of.

Porter now considers that this kind of thinking will become the biggest source of growth and innovation in the next 10-20 years.

Let's make room for disruptive innovation then, and consider whether provocations like these could stimulate into being entire new business models which meet our customer's burgeoning expectations of shared value.

• Could you benefit by abandoning your biggest channel-to-market during 2011, given that it's now in decline? 
• Could your management accountants examine contributions by consumer instead of by product?  
• Could you stop advertising and rely on incentivising the crowd to do that work for you? 
• Could your best employees become more valuable by spending one day a week working for the competition? 
• Could you stop selling tools, and start providing experiences ... perhaps at no charge to the end user? 
• Could you sell at higher margins by persuading your customers to take products they don't know think they want?

Have fun, and please let me know how you get on!

Brainstorming alone

 In a previous post I shared my views on how to get the best results from a group session on creative thinking.


We ran another workshop last week, so perhaps it's time for a few additional reflections.  It transpires that some "rules" are more important than others, so here are my top three ...

1. Be careful who joins the exercise.  You should have a diverse group, and each participant should be open-minded and realistic about the likely outputs.
2. Take the group outside their natural environment, but make them comfortable there.
3. Keep the pace up:  If there's any criticism of ideas, or if you're spending more than two minutes on any one idea, then it's time to move on.

These workshops usually generate excellent results, and last week was no exception.  However I'd also like to draw attention to the power of using creative thinking techniques alone.  Edward de Bono is a keen advocate of this (see bibliography) and I wholeheartedly agree.  


For the last six months I've taken ten minutes a day to do exactly this, and it works every time.  I always run out of topics of interest long before I run out of ideas to address them!   And I have psychometric evidence to demonstrate that ideas aren't really my forté, so I believe this is a trick anyone can perform. 


If you're keen to discuss this then I'd welcome the conversation.

Method Obsession

A fresh year; and with it a fresh perspective—or so I hope.

I'd like to start the year as I mean to go on, and for the moment my most urgent intent is the deliberate avoidance of frameworks, methods and processes.

As readers of this column you've probably already bought into the need for creative thinking at work (the clue's in the title!)  But if we're not careful, our allegiances to the rules of industrial best practice can overcome us—and of course they intentionally stifle creativity, because their goal is a repeatable set of behaviours, transformations and outputs.

Those of us classed as knowledge workers in analytical fields will often have embraced methods early in our careers, as a way of replicating the successes of our elders and betters.  But we should recognise that those role models don't stick rigidly to methods—indeed their own successes began long before those methods were ever articulated.

Of course this is not to say that methods don't have their place.  They certainly do:
1.  As a reminder to the hasty
2.  As a guide for those lacking in confidence
3.  As a check-and-balance for any of us
4.  In other situations where a wholly formulaic response is the right one

But if we're smart about the pros and cons of methods, we can repeatedly ask ourselves "Is this the right approach, given my situation?"  This simple question allows us to venture outside defined process in addressing challenging tasks, and creative thinking is just one response.  If instead we confine ourselves to prescribed methods then our activity becomes increasingly commoditised.

For me, the Gaudi building in the picture above is a splendid representation of this freedom to do the right thing:  You get the feeling that he could only have arrived at this design by throwing caution and convention to the winds, drawing-up something unusual which he believed people would like, and only then consulting the rulebook for the finer details of the construction.

"Highscreen" is the new "Widescreen"

I spend much of my working week tracing familiar paths around the northern part of central London.  It's repetitive, and I often find I've switched to "autopilot", arriving at my destination with little or no recollection of the journey.

But I live 100 miles from London, so I rarely see it at the weekend.  That why it was so interesting to wake up this saturday morning in Barbican, don a pair of jeans instead of a suit, and revisit some familiar haunts with a recreational (rather than functional) perspective.

And it's amazing what you see:  Upon opening my curtains on the sixth floor, three gigantic cranes confronted me.  I've walked past them hundreds of times, but never spotted them before.  What are they building, and why?

Perhaps it was the much-diminished pedestrian presence which exposed the many metal cabinets adorning our pavements.  Are these part of our electricity, gas or telecoms infrastructure?  Who uses them, and why?  And whence the welcome development of street artists attacking them with colourful patterns?

There's usually no opportunity to look up inside Baker St. underground station.  It's more important to watch the movements of others acutely, so as to avoid collisions in the morning maelstrom.  But when you do look up, the ceiling is remarkable:  It's decorated with rather formal squares and circles of red on white.  Who did that, and why?

Looking up at Marylebone train station was also revealing.  The sheer complexity of the interwoven steel frame is mind-boggling, and I loved the juxtaposition of a group of stranded helium balloons amongst the struts and arches.  Changing my viewpoint slightly I spotted a cluster of CCTV cameras, and of course that triggered sightings of several more cameras dotted around the building.  Why so many?  Who watches the footage?

All of this reminds me of an exercise a few years ago, undertaken as part of a photography class at my local college.  We were asked to spend a couple of weekends shooting 26 images, one in the form of each letter of the alphabet.  Until this task provoked me to look up, I'd never imagined that some lamp-posts look like a 'J', or that a window frame could resemble an 'A'.

Why do we so rarely look up?  I think it's a gravity thing.  For land mammals like us, the most important objects are on the ground.  For basic survival it's been much more important to look left, look right, look behind, or look into the distance.  Of course this is why widescreen TVs have replaced traditional square tubes: Most of our TV programmes are about people, so why waste all that space on the sky?  How different things must be in the genuinely three-dimensional world occupied by birds or fish!

So next time I commute, I'll look up, look around, ask "why?", then try to work out the answer.  I expect I'll learn a lot, and perhaps stimulate a few more new ideas.

Customer Experience as a Product

As you might expect, I spend much of my time working with customer-facing industries rather than product designers and manufacturers.  As such I'm often inspired to consider how I might lift the best lessons from product innovators and apply them to creative thinking and innovation in service industries.

Many of you will face this same challenge, and I encourage your comments:  When first we scour the internet for advice on creativity or innovation we find the richest material in the domain of the product developer.

So what's the "product" of a Business-to-Customer (B2C) or Government-to-Citizen (G2C) organisation?  I believe it's the customer experience.

If we accept that assertion, then our job is to supplement our current list of techniques for improving customer experience with additional insight from the product industry.  Here's my attempt to translate a few popular rules:

"Use Technology-Pull innovation, as well as Market-Push innovation"
... could be elaborated into: "Explore and experiment with the potential for emerging technology to positively affect the customer's perception of service, including impacts on sensory perception, environment, perceived value, ease, accessibility and reliability of transactions, and supplementary value-added services."

"Make time available for staff to work on their own projects"
... might usefullly become: "Pay customer-facing staff for reflecting on the service they provide, give them time to compare notes and consult customers informally, and then propose improvements.  Listen to their feedback, and act on it."

"Launch early, then continuously improve"
... could translate into: "Set aside significant budget to run a continuously evolving portfolio of concept stores, offices, websites and other centres of service.  Pay close attention to the reactions and behaviours of customers exposed to those experiments.  Roll-out each concept more widely as soon as the balance of risk swings positive, and expect further development to be necessary in the field."

"There are no bad ideas"
... applies pretty well without translation, but we might add "Review all new ideas for customer service with an open mind, and with a facilitator-led customer focus group.  Actively seek to transform 'bad' ideas into 'good' ones."

Aside from this list, so much other advice remains intact:  It's still entirely appropriate to apply lateral thinking, to share information as widely as possible, to challenge our subconscious assumptions, etc.

All that's happening here is a shift from the focus we're used to reading about: Service industries should concentrate on the core "product" of customer experience, relying on the supply chain to drive innovation in underlying goods and services. 

Now we know what belongs in that empty cardboard box.

My Latest Failure

It's hard to find any serious literature about creative thinking or lateral thinking which doesn't strongly recommend that we expose ourselves to exotic stimulus of various kinds.

The logic is that by forcing cognition in unusual domains, we'll form new pathways in the brain, and we'll subsequently be able to exploit those new pathways so as to arrive at new and unusual ideas.

That seems pretty reasonable in theory, but I wondered if it works in practice.  So in the spirit of experimentation I plumped for the quintessential exotic stimulus, the outside experience most heralded by the literati of creative thinking:  I visited an art gallery, and specifically the Tate Modern on London's south bank.

I predicted I'd emerge from my experiment two hours later having debunked the theory, at least to my own satisfaction.  Here's what really happened ...

I toured the open galleries on the third and fifth floors, spending most of my time at exhibits which either attempted to challenge metaphysics, or which were wholly unexpected in some other more subtle way.

I made notes as I went along:

1.  Bridget Riley creates waves within waves, and uses diagonal directions instead of just North, South, East and West in her grids.
2.  Mimmo Rotella ripped pieces from bill posters to create a collage.
3.  Richard Artschwager sculpted a desk and chair ... which aren't.
4.  Alexander Apóstol photographed residential buildings, then digitially removed their doors and windows.
5.  Richard Serra created a precarious structure from heavy sheet metal, to make his audience a little nervous, the better to engage their interest.
6.  John Latham created a dynamic layout of books, then shot them in a video in different configurations to suggest that they could move unaided.
7.  Anish Kapoor has represented the creation of the universe as a vertical line in "Ishi's Egg".
8.  Dennis Oppenhiem photographed a tractor ploughing a field in a series of parallel lines which were anything but straight.

So is this collection of observations valuable to me? 

As I've probably remarked before, I've been carrying around a list of 300 random words like "plane", "coaster", "parrot", ...  I use them to provoke new ideas to address existing problems, and they're usually very helpful. 

But this new imagery from the Tate is much richer. 

Next time I'm trying to cut costs in a supply chain, I'll probably still think about goods flying between distribution centres, in response to the word "plane".   But perhaps after seeing Oppenhiem's tractor, I'll also think about the benefits of indirect routes, or about "growing" goods at the point of need.

Love them or loathe them, everyone should lose themselves in a gallery a few times a year.   My attempt to debunk the theory was an abject failure!

Innovation, version 3

Those of us with a background in technology have long been familiar with the conundrum of business-to-IT alignment.  We often find ourselves in the middle of tussles between

• Business people who don’t (and don’t wish to) understand the complexities of IT, considering it something of an ivory tower, and
• IT people, many of whom value technical exactitude and purity above actual return on investment

This divide will be instantly recognisable to millions of knowledge workers around the world, but after numerous prominent failures of alignment, it’s gradually being overcome via business partner models, enterprise architecture, better collaboration, and the continuous encroach of technology into all of our private lives.  The latter is particularly significant, with many businesses struggling to keep up with the rich, social experiences that their customers and employees can get for free at sites like Google, Facebook and Twitter.

So with the business/IT divide a well-established phenomena, it’s amazing just how few texts on “innovation” fail to discuss the way in which the divide manifests itself in that domain.  Here's my interpretation:

In most industries, business people will think first-and-foremost of Market-Pull innovation—unusual or creative ways to respond to established market needs.  (For example, the automotive airbag was a response to the demand for better crash safely in cars.)

However, many technologists will recognise only Technology-Push innovation—the research and development of inventions, in the hope that a problem will subsequently offer itself up.  (One example is the invention of MP3 encoding, which has subsequently largely displaced the compact disc.)

Coming to recognise these two basic flavours can help organisations surmount many of the semantic debates about the word “innovation”.  And sorting out the language can be a critical stepping-stone to identifying gaps in innovation strategy, with most organisations opting for some composite of the two types once they recognise that both exist!

I was quite pleased when I first recognised these two flavours, and felt very comfortable when I learnt to work with them.

So it was a mixed blessing when I started meeting Italians …

Marzia Aricò is the designer working for the Hot Spots Movement.  She has a background in both design and innovation, and is an advocate of Design-Driven innovation—a way of adapting creative design processes to produce radical innovation which are still based on perceived market demand.  I’ll be watching with interest to see how this third way takes-off, and in the meantime you can read her description of it here.

Artistic Licence

In the last few days I've spoken to people from several organisations who suffer from an interesting obstacle to creative thinking:  They don't think they're allowed!  It's not the corporate way.

This obstacle is caused by more than just the doctrine that analytical thinking is all-important; rather it's part of a corporate upbringing which places no value on creativity, but values time highly.  In this kind of environment, any avant garde modes of thought will be seen as unproductive wastes of time, and are unlikely to get a fair trial.

People in this kind of situation (and lots of us have been there!) need to unlearn patterns of behaviour that have formerly served us well.  In many industries, and especially in technical or mechanical work, we earn our spurs early on via a dogged commitment to logic and analysis, at the expense of other more open-minded approaches.

But this kind of constraint really isn't good for anyone.  It bores and weakens individuals, and it commoditises the output of the corporation.

So we must learn to engage our powers of thought again, and I find a growing movement of important thinkers throwing themselves at this kind of agenda.  For example:

1.  Lynda Gratton's book "Hot Spots" (see bibliography) points out that ambiguous questions are much more likely to ignite hot spots of energised, innovative behaviour.  We won't stimultate creativity with closed, narrow or prescriptive challenges, which tend instead to result in "dehydrated conversations".

2.  Chris Guillebeau’s latest article (see links) is a powerful tract on being yourself, and resisting the corporate forces of homogenisation. 

3.  Bob Anderson's document on leadership tells us that "most of us would be genuinely shocked if we learnt how much of our behaviour with others comes from a place of fear in us" and "we speak up at meetings or remain quiet in front of our colleagues and bosses, hoping to look brilliant or avoid looking foolish".


Mindless adherence to best practice doesn't just harm creativity—it can also harm our analytical thought!  We all know that three-year olds ask "why?" ad infinitum.   But do any of us do that at work?  Not often, I'd guess.  Instead people tend to worry about looking stupid, or decide their curiousity has had sufficient free-rein when they think they spot a familiar pattern.

So I suggest we each develop our own principles for work, and always try to be true to them.  If you believe in creative thinking then I hope you'll develop a principle to support that commitment.

Opportunity for all

I've been reading a very interesting book in the last few days.  The author is very familiar to me, but this is not in his usual style.

Edward de Bono's "Opportunities" presents a formula for embedding the search for new and better products and operations into the normal day jobs of senior managers, in such a way that this doesn't just become a "nice-to-have" aspect of their roles.

What a good idea?  Typical of him, really.

Far from being hypothethical, we feel that we're reading a thorough and carefully-considered account of methods which de Bono has actually seen in practice.  (I'm looking for empirical evidence now, and would appreciate any feedback.)

There's an unexpectedly large amount of detail in the book, so I'll provide only a taster here:

• Traditional roles don't often reward the pursuit of new opportunities, especially in the public sector.
• There's often no-one who "owns" that pursuit either.  Everyone expects someone else to do it.
• Despite this, the search for new opportunities should be taken-up at all levels to allow organisations to remain competitive.
• So we need to encourage this important activity, even though there's usually something more urgent to keep us busy.
• It can figure in everyone's job description.
• There should be an "Opportunity Audit" process, whereby an "Opportunity Manager" supports managers in producing annual "Opportunity Reports".
• These reports oblige managers to seek opportunities in their areas, and in others' area--but more importantly to secure sponsorship to take them up.

All of this seems eminently sensible, and I struggle to find fault with the fundamentals.    So why don't we hear more about it?

I can only speculate that:

1. At board-level, the search for opportunities seems so unavoidable that it's assumed everyone already does it, ... or 
2. A fairly rigid framework like de Bono's seems antithetical to the kind of spontaneous, creative thinking we usually associate with market exploration, ... or
3. No-one has yet shown the foresight to set-aside sufficient budget for such a scheme, despite the significant likelyhood of sharp and swift returns.
   

Perhaps I'm wrong.  Perhaps this has already been tried unsuccessfully by a number of companies.  If you know the answer, please get in touch.

Favourite ways to provoke people

Creativity in an artistic environment is one thing; creative thinking in the context of business activity is quite another. 

Central to the act of creative thinking in business is the act of provocation.  I'm convinced by the argument that the educational institutions of the western world have eroded our creativity, replacing it with patterns for analytic problem solving which in time become our only instincts.

I'm sure you'll readily recollect an education in which you were taught that "Peking" was the capital of China.  But do you ever recall being offered any alternative perspectives?
1.  If you're chinese, the capital is "Beijing"
2.  If you're a grammar buff, the capital is "C"
3.  If you're in finance, the capital will be "yuan", or "renminbi", or "kuai", or "jiao" (various names for China's currency)

Once you've arrived at these alternatives, it's pretty easy to back-track to the original question.  And the trick of provocation helps you reach those paths-less-trodden. 

We started to discuss this subject in a previous post, but now I'd like to offer-up a few basic methods to help you provoke the mind away from it's normal path.  You'll be able to get a long way with just a simple expression of four common methods, derived from one of the many books on the bibliography page:

First of all work out precisely what you want to think about, and write it down as your "focus".  It could be a problem, an opportunity, or just a subject area which you feel warrants further exploration.

Then apply one or more of the following provocations, in any order ...

Re-focus and re-state
Examine the top three causes and top three effects of your focus, and consider re-focusing on one of those if it might yield broader results.  Experiment with putting your focus into different words, use synonyms and similar phrases to re-express the focus so as to open-up other lines of thinking.

Use analogies
Consider if your focus has any "parallel worlds" (the best example I've spotted is roll-on deodorant, apparently invented by considering the roller-ball pen!)  Also try putting yourself in the shoes of a personal hero, and try to imagine how he or she would proceed.

Revolt!
Try to find an attribute of your situation which is fixed (e.g. ice forms water when it melts) ... then consider what would happen otherwise, and how that could in fact be prevented.  Consider the use of a "magic agent" which can overcome your most immediate obstacles ... then work out if such an agent could be introduced.  Consider the positive applications of apparently negative features of your situation, perhaps from the perspectives of others.

Randomise
Pick a random word or phrase, inject it mercilessly into your focus, and see what emerges.  (I carry 300 random words around with me for just these purposes, and they've never failed me yet.  I only wish I had more.)


Various authors have written extensively on how these techniques can be elaborated into more sophisticated workshop exercises, to be used for collective creative brainstorming.  But very little attention is given to the power of using them alone in a quiet room on a rainy Thursday afternoon.  It actually works very well, if and only if you believe it will work well.  So when you're next feeling upbeat about creative thinking, please give it a try.  I'd love to hear how you get on.