Thinking Faster

Humor Me

Here's an interesting question:  can making something that most people refuse to do, that might be "good" for them, interesting or fun encourage behavioral change?  Rather than lecturing you to eat your vegetables, could turning the situation around and making it fun or rewarding encourage you to do things that are good for yourself, or your community, or the planet?

Of course this is the carrot and sticks argument.  I can sternly warn you to do what's good, or right, in my opinion and threaten you with punishment.  In this regard I am using coercion to force you to adapt your behavior to what I wish, or what I believe is correct.  Your reactions are self-evident.  You unwillingly adopt the behavior when observed, but probably revert to old behaviors when not observed, and attempt to subvert the system whenever possible.

However, if I can change your thoughts or behaviors by engaging you in something rewarding or fun, you have made a conscious choice without threats.  You are more likely to repeat that behavior and retain that behavior over time, and model that behavior for others.  So, if this model is so much better, why isn't a carrots model used more frequently?  I don't yet know, but I'm forming some opinions.

A new Volkswagen initiative sparked my interest in this topic.  You can see it at The Fun Theory, a new website that supports a program to encourage people to modify their behavior through fun and rewards, rather than sticks and threats.  My favorite is a set of steps that mimic piano keys and allow people who use the steps rather than an escalator to play a tune.

What if your health insurer placed stickers on apples and other fresh fruits and vegetables.  If you purchased one of these at the supermarket you could enter a contest to win an award for healty eating.  It would seem any behavioral change we might desire could be influenced through fun, amusement and games or rewards.  Imagine a trash can that returns a ticket to a lottery each time you place trash in the can.  There'd be little to no litter if people had an incentive to clean up their own litter, much less an incentive to pick up the litter of others.

This kind of thinking is important because we face an array of demographic and societal challenges, in addition to all the challenges in the business world.  New thinking and new methods to encourage the best behavior and modify behaviors over time is welcome, and I think can be rapidly implemented.

"normal times"

I read a recent survey of leading executives in "innovative" firms that was conducted by Booz Allen.  The results weren't surprising to me.  Many of the leading innovators are actually accelerating their innovation efforts in the recession, betting that customers will demand new products and services as we come out of the downturn.

But that wasn't the only thing that interested me about the survey.  What was really interesting was the professed mindset by one of the executives they interviewed.  A gentleman from IBM suggested that in a recession or downturn "...that really drives a need for innovation and a level of creativity that you might no otherwise have in normal times."  My question is:  what is "normal times"?

Executives in business seem to be no less likely to have the "up and to the right" concept of market advancement that the rest of us have.  That is, we expect each year that the markets will rise and the economy will grow.  We never anticipate or plan for a slowdown, a downturn or a recession.  These periods are considered "not normal".  Yet if we look back over any reasonable period of history we can find plenty of slowdowns, downturns and recessions.

Less than ten years ago we were coming out of the "dot com" bubble, where the economy slowed and jobs were scarce.  In the early 1990s the economy was very slow, which led to the ouster of the first Bush and the presidency of the first Clinton.  There was a dramatic slowdown in the economy in the late 70s and early eighties that coined the phrase "Stagflation" and led to the presidency of Reagan.  The oil embargo of the early 70s also sent price shocks through the market.  This list is just off the top of my head - evidence that the market doesn't constantly rise (remember the 500+ point market drop in 1987?) and the economy doesn't promise an endless stream of new jobs.

So, what is this IBM executive expecting when he pines away for "normal times"?  He's probably recalling a short period of time (2003-2007 for example) when the market grew rapidly.  That time period has been bracketed by the dot com bust and the financial meltdown, both of which impacted the economy and job growth.  Why aren't these considered "normal" times as well?

And, rather than expect the market to consistently rise and the economy to grow, why aren't executives better at predicting where the economy is heading and the implications for their business.  As Wall Street watchers like to say, the most common word in any analyst call is the word "surprise", as in "we, the management team, were surprised by the (Fill in the blank) that happened to the market".  Why do the executives get the big bucks if they are constantly surprised that the environment does not provide continuous "normal times"?

The economy has the ability to lull you to sleep, secure in a comfortable cocoon, safe in your assumptions that the economy will continue to perform the way you are comfortable with, and then rapidly shift and force your firm to think differently.  Perhaps we should be a little less intellectually lazy and constantly test our assumptions about the economy.

Cheap, Fast and good enough

As you know, in today's society, one data point is cause for discussion and two data points are a full on trend.  I mention that because I have a sense that many consumers and the cognoscenti as well are beginning to get fed up with intricate, highly finished products that have too many features and bells and whistles that don't seem to add much value to a consumer.  Yes, I'm looking at you Windows Vista.

What got me thinking about this was an article in September 2009 Wired magazine entitled the Good Enough Revolution, which is an article describing how the Flip Video camera zigged while the rest of the digital video providers zagged, and why Flip won.  Basically, it recognized that people wanted video that they could quickly share and was simply "good enough" for replay or perhaps Youtube.  They didn't need 999 megapixels with sophisticated lighting options and radical zoom, since they weren't going to Hollywood with the footage.  The Flip was a stripped down, simple, small, pocket video camera that was limited to about an hour of video recoding, had no interchangable battery but was so simple my 9 year old can use it (and does on a regular basis). 

The second data point was also provided by Wired magazine, which wrote in the November 2009 edition about Demand Media.  Demand Media uses algorithms to assess what people want to learn about and then seeks independent writers and film producers to develop the content.  Demand Media is the leading content provider to YouTube.  The videos and writeups about how to change a lightbulb or how to eliminate unwanted facial hair are developed by amateurs who write, script and film videos or simple writeups for less than $20.  Again, the concept is all about speed, low cost and "good enough" advice.  We all know that if you are really going to remove difficult facial hair, you can either get cheap and "good enough" advice, or you can go see your dematologist for $400.  So why not start on the cheap side?

Both of these articles point out that too often product and service firms fail to understand that for the most part we are "satisficing" agents.  Other than hobbyists or perfectionists, most of us want to gain just enough insight or knowledge to get the job done.  We don't want to be experts and don't have the mental capacity or time to become experts.  Microsoft Word has thousands of features that may be important to some small minority of the population, but I'll never use them, and really can't be bothered to learn them.  It might be interesting to see if Demand Media creates How To guides for software applications since the help functions are so ridiculously poor to begin with.

Further, most product developers overemphasize features.  The Flip example goes on to note the "pixel" wars in digital cameras.  At some point it didn't make sense to compete on the number of pixels anymore, but that's all the camera guys had in their arsenal.  Flip countered with what appeared to be a weakness - limited pixels, but triumphed because of simplicity and low cost.

As Christensen and others have pointed out, many disruptions occur when the incumbent becomes too complacent and adds features (and costs) that its customers don't value and don't need.  Disrupters spot the opportunities and provide products and services with less functionality and less cost, which the incumbent laughs off or ignores.  Yes, I'm looking at you, 1970s GM.  You and the other "Big Three" laughed off the imports until they ate your lunch.  Why are we always surprised when history repeats itself?

Book Review: The Design of Business

It's unfair that some individuals can write so well about topics that can be a bit esoteric.  Roger Martin, who is dean of the Rotman School of Management at the University of Toronto, has produced yet another good book about thinking differently.  His first book, The Opposable Mind, captured how good business leaders can see past the traditional "either-or" alternatives to create "both-and" options.

In The Design of Business, Martin offers a view that suggests that design should be the centerpiece or the starting point for much of the work we do in business, and why design is so important.  He's not the first to suggest the importance of design, and a number of firms, such as IDEO, have been in the vanguard of the design-led forces.  What Martin does well is to describe why design led thinking is important, and give examples of how to do it well.

Martin argues that all knowledge moves through three stages - a mystery, a heuristic and an algorithm.  Mysteries are about discovery of new opportunities or research into solving intractable problems.  Heuristics are rules of thumb that narrow the size and scope of mysteries and make them more manageable.  Algorithms reduce the heuristics into repeatable processes.

This leads to two schools of thought in most businesses:  exploration and exploitation, according to Martin.  Most businesses are structured to exploit the algorithms, refining the way they do business and becoming highly effective and efficient, while neglecting the exploration of mysteries.  Martin calls this the reliability-validity tradeoff.  The vast majority of businesses want "reliability" - clearly defined processes that are easily repeatable and produce the same results.  What he argues they need is more "validity" - creating the right and best outcomes through more exploration and less reliance on reliability.  Three powerful forces emphasize reliability over validity:  the demand for proof of the correctness of a new idea, an aversion to bias and time/resource constraints.  These factors reinforce the bias toward reliability and repeatability over exploration and validity.

Once Martin has described his ideas, he then proceeds to use a few good examples to demonstrate the transition from a reliability driven organization to a validity and design driven organization.  One chapter is devoted to the transition Lafley and Kotchka made at P&G, well documented in other places.  Another chapter is devoted to Herman-Miller and the development of the Aeron chair.  One of my favorite quotes from that chapter came from the Chairman of Herman Miller.  He quizzed the design team about who they interviewed and received feedback from about the Aeron chair.  When told they had not asked the sales force for feedback, the chairman said "That is right.  You never ask the sales force what they think of a design.  Their job is to sell it."  Note that the designers spent hundreds of hours with actual customers, watching them work at their desks and understanding the strengths and weaknesses of existing seating options.

The book offers up a few more examples, ones that unfortunately have been used by others to demonstrate innovation and design, including Apple, RIM, Target and Cirque de Soleil.  The weakness of many books about innovation and design is that they either have too few examples and must return to the same well, or that design thinking simply isn't widespread, so the same examples are used over and over.  What's not clear is whether or not these firms are bellwethers or just happy accidents.

On the whole, this is a well-conceived and well-written book.  In what could be a very esoteric topic, Martin keeps the concepts moving and introduces a lot of examples.  He puts his finger on many of the challenges that those of us in the innovation and design space constantly face:  too much short term thinking, too much demand for proof of an idea based on historical norms, too little time and too few resources for innovation and design.

This is a great book, and an easy read. It belongs on the desk of any executive or manager who is tasked with introducing more design thinking into an organization.

Social Media - Blessing or Curse?

To be a bit contrarian is just in my genes, so I thought I'd take a minute to consider the value proposition and the challenges of social media.  Right now it appears that most people who are active on Twitter or Facebook or other social networking and social media sites think that for the most part these are good and valuable services.  I am beginning to wonder if that is true.

For those of us who are relatively active on blogs, and who use social networks like Linkedin, and who ocassionally tweet when the spirit moves us, there is a lot going on in social media that ought to be paid attention to.  Many points of view, many perspectives and many voices.  I can use Twitter as a trend spotting mechanism on just about any topic.  I can seamlessly connect with colleagues and friends across so many different interaction media that sometimes just choosing the right way to connect can be a challenge.

Yet in a time when we need the methodologies created by David Allen to "Get Things Done" and a new book called the Tyranny of Email has just been published, doesn't it strike you that we are almost under assault by all the means of connection and networking?  I regularly have people connect with me on Twitter I don't know and am relatively sure don't understand my point of view.  I am regularly asked to "link" with people on LinkedIn or other social networks, and I don't know these folks.  It could be they are the best in their fields, but I don't want to create links with people I don't know and don't share significant interests with.

Are we really better off with Twitter, Facebook, LinkedIn, Instant Messaging, email and a host of other interaction tools and technologies?  Certainly there's no lack of content.  In a given day thousands of tweets are tagged with innovation as an example, so clearly a lot of people believe they have a lot to say or contribute.  But how do we discern value in all of this firehose of communication?  Is being more connected but less engaged really valuable?  If many people struggle to respond appropriately to email, what are all the other communication vehicles doing to an attention starved populace?  Is it really all that important to know what Ashton Kutcher thinks about Demi Moore or what he is doing right now?

We've become a population that is afraid to be "left out" - we need to know stuff that really has no value and to a certain extent we are at risk of filling our lives and brains with meaningless information at the expense of meaningful dialog and interactions.  It's probably time for a careful analysis of all of the social networking tools and their places in our work lives and private lives, to ensure a balance between communication, understanding and engagement.  If people are too busy and feel too interrupted by email to think effectively, what will layering on all the other demands for your time from products like Twitter, Facebook, IM and other tools do?  Can you live and work successfully in constant interrupt mode?

Knowledge, ability, nimbleness

It struck me recently that the "too big to fail" crowd has it all wrong.  In most cases, the companies that are too big to fail are simply too awkward to change.

Think about an entrepreneur or a small firm.  The firm may have a some knowledge or insight that is valuable, and is very nimble, but lacks the scale and ability to reach a wide audience.  Ony the advent of the internet has changed this dynamic, meaning we can now have very small companies provide services and information to a wide audience.

Over time, small companies grow larger and gain more insight and knowledge, yet they increasingly become less nimble, to the point where changing the focus or intent of the firm, or how value is delivered is difficult if not impossible.  Bureaucracy, organization and process add value as you grow the firm until those things become barriers to change and agility.  Many of our largest firms really struggle to get anything new or interesting accomplished, since change requires a different set of skills.

Perhaps the best operating model is to achieve the best of all three components - knowledge, ability and nimbleness.  That would mean gaining enough skill and insight to be really differentiated, the ability and scale to deliver that value effectively and the nimbleness to adapt to change and market conditions.  Most likely this organization would be a holding company, made up of a lot of small to mid-sized companies or lines of business that are large enough to create learning curve scale but small enough to remain nimble and agile.

Historically only two of these criteria appeared important - knowledge and ability to scale.  Once a firm demonstrated insights or knowledge that was valuable, and the ability to scale, the sky was the limit.  That thinking was predicated on a relatively stable environment where change happened slowly or not at all.  This was true from the end of World War 2 to about 1990, when globalization and increased competition changed things.  These changes were exacerbated by the rise of the internet, which allowed many small but smart companies to "scale" rapidly.

Right now the banking firms are excellent examples of knowledgable, scaled organizations that are locked into traditional models and slow to change.  Many banks are still only open 8-4 and only Monday through Friday.  They seem to think the financial world came to a screeching halt in 1950.  Meanwhile a significant number of smaller disrupters and competitors, much more agile and facing far smaller scaling costs (see Mint) are chipping away at the customer base of the larger financial institutions.  And like good bureaucracies with something to protect, the larger banks are fighting change and resisting new legislation, rather than accept the fact that the world has changed.  Large and smart but rigid isn't an operating model anymore.

Removing the Blinkers

As a consultant, I have the opportunity to interact with people in a range of industries.  Since I work primarily in the innovation and product/process improvement space, I don't claim to be an expert in any particular industries.  My value add is bringing new tools and new perspectives, plus the experience of knowing what works, and what doesn't work, to my clients.

I like, however, to be informed about what is going on in the industries I happen to be working in, so I usually set up a Google Alert with key words about the industies where I am working.  I also follow blogs that seem interesting or influential, and track the twitter-rati in the specific spaces where I am actively working.  This helps me understand the current issues and new ideas in the markets where my customers live every day.

So it comes as a real shock to me almost every time I speak with my customers that they have very little knowledge of their own industries outside of a very narrowly framed perspective.  If I interact with a senior product manager, he or she may know a great deal about the immediate competitors, but virtually nothing about new startups or firms in adjacent industries that are seeking to enter the space.  Recently I held a training session with a number of bankers.  Over 70% of the people we talked to were unfamiliar with Mint.com, the fastest growing financial website on the web, and just recently acquired in a major acquisition by Intuit.  That wasn't difficult information to find, and the trends demonstrated by Mint and other web-based financial management tools have a huge impact on the bankers.  Yet they were blissfully unaware.  However, this lack of foresight and exploration isn't limited to bankers, I've found it to be the case in just about every industry I work in.

Most people in an organization do a good job of reading the trade rags for the industry - the "approved" voices.  In banking that's American Banker, and every industry has it's own Gray Lady.  However, for most people that's where the reading and scanning ends.  There's little reading in contrarian magazines or blogs, and very little interaction with social media.  Reading about issues and emerging threats in adjacent industries or market spaces is apparently as common as reading Beowulf in the original.  Yet most competitive threats come from adjacent markets or new entrants to existing spaces.

Why is there such a lack of interest in what's happening in the market?  I don't understand if it is a lack of interest or passion, or a helplessness that's brought on by the feeling that one couldn't do anything about a new discovery anyway.  Some of the easiest market intelligence and evidence of trends is developed and presented to you every day.  How are you using it?  Do you have your blinkers tightly adjusted, or can you pick your head up and see what's going on all around you?

Defining Transparency and why it is important

In my last post I asked for more transparency.  It occurred to me that, much like pornography, it's hard to define but we know it when we see it.  So, rather than talk about abstract concepts like transparency, let's describe what we mean.

Currently in the banking space, there is very little transparency.  When you open a bank account, there's a ton of legal gibberish thrown at you and you are simply expected to sign it.  Transparency in this case would be a simple document that calls out the important rights and obligations - for you, and for the bank.  When you are denied credit or turned down for a loan, there is often little transparency.  In this case transparency would be a clear indication about why you were denied, and perhaps some guidance on how to correct the problem.  Recently I was charged an overlimit fee by a credit card company.  When I called to ask to have it waived, I was told that wasn't possible.  I asked about how to escalate the issue and was told there was no escalation procedure.  Tough luck!  I just continued to press the issue and it was finally resolved.  I am uncertain whether or not to keep the card.  There was a complete failure of transparency in the support process. I would have preferred a simple progression with clear communication about the next steps.  First I was told there were none, then it turns out perhaps there is some escalation possible.

Beyond the banking industry, I'd like more transparency in government.  The Obama administration entered and promised more transparency.  Remember when Obama promised to post any bill at least 72 hours before a vote?  This administration is as opaque as the Bush administration, and neither seemed to understand the importance of transparency when it comes to trust.  We have an engaged, active electorate that wants to see the fine print, and wants some sunshine on the sausage making.  If Charlie Rangel has ethics problems, let's bring them to light NOW.  Hiding behind obfuscations, whether that's executive branch decision making or 1000 page bills that don't get read before a vote don't create transparency, and create even more corrosive distrust.

Someone recently described transparency this way:

"Transparency is also about what you ask people- not just what you tell them." Jennie Bledsoe, Dir. Internal Comm, ServiceMaster.

Partially correct.  True transparency would be to do as much of your work in the open, so people don't even have to ask why you do what you do.  Trust comes from believing that your partner, your supplier, your government has your best interests and outcomes at heart and works to fulfill them. 

Reagan said "Trust, but verify".  I don't need to verify the things I can see and experience.  Transparency provides visibility and answers questions before they are asked.

In a world full of bloggers, Tweeters, socially connected Facebookers and friends, it may be hard but it is rarely impossible to find out what is going on.  The more difficult a firm makes it to understand its inner machinations and decisions, the less people will believe in it and the more they will drill in to find out what's going on.  A decade ago it took several years to prove Enron was corrupt, but it was outside analysts that discovered the truth.  More recently it took several years to discover Madoff's deceits, but it was uncovered as well.  The Obama administration is facing calls for more transparency, from troop levels in Afghanistan (already leaked) to decisions about health care.

The banks haven't yet figured it out, but they will, or they'll go the way of the dodo. 

We, the consumers, are too engaged, too smart and too connected to ignore the walls of obfuscation and the deliberate attempts to impugn our knowledge and ability to interpret.  Make it easy on yourself, design your business for transparency and customer engagement, rather than building walls and keeping secrets.