Monthly Archives: November 2013

Internet Economy, Product Management

The boom in innovation

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I’ve spent the past couple of hours going through my feed reader catching up on all the stories I’ve missed over the past week or so and I was struck by the enormous number and inventiveness of the new apps and hardware being reported on.

It strikes me there are several things happening at once which have come together to create this explosion of creativity:

  • The emergence and ubiquity of powerful smartphone platforms – mainly IOS and Android at the moment, it has to be said – packed with sensors
  • Cheap and scaleable cloud computing platforms which makes initial costs low and encourages experimentation and lowers the financial bar
  • The coming of age of funding platforms like Kickstarter which combine easy access to crowd-sourced funding coupled with the rapid feedback of a social network (if you don’t get to the target amount, it’s a powerful message from the market)
  • The emergence of cheap 3D printing which makes prototyping much, much simpler and cheaper. (You can buy 3D printers in Maplin, a sure sign the technology has arrived!)
It may feel a bit like the bubble in 2000, but these enablers make things very, very different this time.
Internet Economy

The death of a business model

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A man came to the door last night to try to sell me a framed photograph of my house taken from his light plane.

Fifteen years ago, a couple of years after we moved in, the same thing happened. That time I was fascinated to see the image – I had never seen my house from that perspective before. I can’t remember what I paid, but it wasn’t cheap, and I was happy to pay.

This time I declined. I am now so used to seeing my house from the air there is no novelty anymore. What’s more, I’m confident that the image on the web will be updated regularly – not the case with the picture on the wall.

The doorstep seller argued that his photograph was much better quality and seemed a little cross that I wasn’t buying. I can only guess that is because he got the same reaction at every door. This is the innovators dilemma at work; web imagery is already good enough for most of us, and they will get better and better, that much we can be confident of.

 One more business model bites the dust….

Internet Economy

Why large organisations find it hard to innovate

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Large organisations find it so hard to innovate, according to Dr. Jeanne M. Liedtka, because of the “physics of growth”. Dr Liedtka, who is currently running an MOOC on Design Thinking which I am taking, says there are critical differences in the way VCs and large corporates approach innovation. VCs understand that their ability to predict success is poor (success rates of one or two ventures in 10 are typical). Therefore they adopt some key practices to improve their odds:

  1. Betting heavily on individuals with good experience of both success and failure 
  2. Keeping bets small and affordable until they have better data
  3. Making sure if they don’t succeed that they fail quickly
In contrast large organisations are optimised for execution. This means, she says, they love big ideas which makes sense from their perspective: focus and control are key and concentrating on one or two big things is much easier than on many small things.
But there are some terrible side-effects with this approach when in comes to encouraging genuine innovation:
  1. Big ideas, by their nature, tend to have been found by other competitors already
  2. Customers are terrible at envisioning things which don’t exist
  3. “If you insist on home runs you won’t get many singles, let alone home runs”
  4. When the ratio of resources invested gets too far ahead of knowledge possessed “bad things happen”
All of this discourages learning in managers – and learning is the key mindset for innovation. After all, she says, you don’t learn to juggle with flaming torches but with bean bags!
Large companies also thrive on analysis. But we don’t have enough data on genuinely new things to do any coherent analysis on. When managers are challenged to support a new big idea with past data the temptation is to make it up. 
All this leads, she says, to trapped managers in a kind of growth gridlock. 
The chart below summarises the two approaches. “Geoff’s” cycle (the VC or entrepreneur perspective) starts from an open mindset and is strong on varied experience and customer empathy – which means being deeply interested in the lives of customers are people. 
In contrast “George’s” cycle (the large corporate perspective) starts from a fixed mindset (aka deep expertise which is so successful in an execution setting) and relies on customer data. You can read the results for yourselves. 
This is one of the best descriptions of the fundamental mechanics of the innovation process that I have yet seen. The good news, according the Dr Liedtka, is that all of this can be taught and there are many examples of large corporates making innovation work in exactly this way. I’m looking forward to the rest of the syllabus. 
Internet Economy

Lingering is bad for business

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The FT ran an article last month which resonated considerably with me. The thrust of the piece was that lengthy goodbyes are not good for business.

What is the point of these lengthy handovers? Once your departure is announced, your authority leaves with it. Your mind, however hard you try, is surely turning to what you do next.

It went on to cite three examples: Angela Ahrendts who is leaving Burberry, Steve Ballmer who is stepping down as chief executive of Microsoft and Sir Nicholas Hytner who is retiring as director of Britain’s National Theatre.

In each case there is a lengthy gap – up to 18 months – before the departees actually depart.

My recent experience of retiring after 30 years at RBI has taught me that the less time between the announcement and the departure the better. In my case we informed the company at the end of September and my actual agreed leaving date was today – quite a short period, it seems, in senior business circles.

Even so, I could see the problems of an extended stay. The process of announcing your departure follows a pretty set pattern. The announcement goes out and there are (hopefully) general expressions of shock and dismay. Shortly afterwards, though, people’s attention turns to what and who comes next. Then the emails get less frequent and there are slightly fewer meetings. You can see the calculation in people’s minds as they work out whether you are going to be around for the conclusion of whatever project you are being asked to validate or comment on. Quite quickly the organisation heals around your future absence. So the faster you get out the better for everybody.

This reaction is entirely healthy: companies exist for what they can do in the present and the future and not what they have done in the past. Once a departure date has been announced you become part of the past – better to acknowledge it and move along gracefully. I agree with the FT: no good can come of the lengthy goodbyes.