Surely Richard Scarry would approve!
There's plenty of advice out there for UK-based TESCO' s new CEO Dave Lewis as pledges to return to the core of Tesco's business, "in price, availability and service."
For me, there's a critical question: what one change will deliver an 80% difference in results?
I think I know. I spent 6 months visiting TESCO at least twice a week when I was in Hertford, and all I can say is "wow." If you just view TESCO with the eyes of a typical US customer, it's obvious what that 80% difference is.
There really aren't as many difficult calls as it seems.
So, what's the one thing TESCO has to focus on? Restocking shelves to meet demand during and after peak traffic.
Every evening, right after after-work traffic died down, here's what the TESCO produce section would look like:
And that's not all, their soft drinks are not replenished either. So if you go buy a Dr. Pepper in the morning, and then come in the next day - guess what? No availability.
This was a problem all over England.
Dave Lewis, just fix it. Whatever it is they do here in the US to keep stocks replenished, copy it.
That's it. The one thing that will save TESCO.
T.S. Eliot had his "social function of poetry" and we have social media - YouTube, Twitter, Facebook, etc. etc.
Could it be that what we celebrate as the art of our times is not Art at all? If so, What is Art?
At best, our culture has relegated Art to the dubious field of "entertainment" - hijacked from its true purpose, left to serve as a decoration on the public walls of high society museums and the private walls of wealthy collectors. At best, art is fashion.
Wait, wait, wait.
John Seely Brown's latest newsletter takes us to task by raising an important point:
"Artists are not included in our debate on how we build the economy for the future. They're excluded in our nation's emphasis on innovation which has been left to the STEM crowd. We're not thinking about designing for emergence. Innovation is about seeing the world differently. Who is better at helping us see the world differently than the artists?"
Why is this? I can think of three reasons:
1) The "art" made by "artists" is irrelevant
2) The "artists" are not Artists
3) Art is generally devalued in a society polarized by Science, Fashion, and Politics
Alright, I'm being a bit silly, but here is someone who's not: Ben Davis and his 9.5 Theses on Art and Class (h/t Doug Smith) serve as both an indictment and a wake-up call for artists everywhere. Have a look at this excerpt:
2.0 Today, the ruling class, which is capitalist, dominates the sphere of the visual arts
2.1 It is part of the definition of a ruling class that it controls the material resources of society
2.2 The ruling ideologies, which serve to reproduce this material situation, also represent the interests of the ruling class
2.3 The dominant values given to art, therefore, will be ones that serve the interests of the current ruling class
2.4 Concretely, within the sphere of the contemporary visual arts, the agents whose interests determine the dominant values of art are: large corporations, including auction houses and corporate collectors; art investors, private collectors and patrons; trustees and administrators of large cultural institutions and universities
2.5 One role for art, therefore, is as a luxury good, whose superior craftsmanship or intellectual prestige indicates superior social status
2.6 Another role for art is to serve as financial instrument or tradable repository of value
2.7 Another role for art is as sign of "giving back" to the community, to whitewash ill-gotten gains
2.8 Another role for art is symbolic escape valve for radical impulses, to serve as a place to isolate and contain social energy that runs counter to the dominant ideology
2.9 A final role for art is the self-replication of ruling-class ideology about art itself--the dominant values given to art serve not only to enact ruling-class values directly, but also to subjugate, within the sphere of the arts, other possible values of art
OK. But why are artists banished from the Republic?
One can argue (via Ben Franklin) that the last artist was Jesus and before him Socrates. I'd add folks like Gandhi, Malcolm X, Mandela, Marley... The artist sees differently. Not just paintings on a wall, but society itself. Who paints our vision for society today? Lady Gaga or our lobbyists?
Walker Percy saw the artist (or writer) as a canary in the coal mine. The artist as prophet. But we are deaf to the canary. We've banned our artists from society - not by muzzling them with threats and jail time, but by turning them into designers of consumer and fashion goods.
For the first time in history, we've made art useful as a financial commodity- and killed it in the process.
Meanwhile, somewhere, hidden from the lights of Sotheby's and Christie's, art is still being made.
Here's a new and important book that helps us make sense of the changing business landscape. It's Big Bang Disruption: Strategy in the Age of Devastating Innovation by Larry Downes and Paul Nunes (from Accenture) - and it describes how so many businesses are disrupted overnight by big-bang innovations that come out of nowhere. The insights presented by the book add new perspectives to the work on disruptive innovation by Clayton Christensen and gang.
According to the authors, the big-bang disrupters may not even see you as competition. They're not sizing up your product line and figuring out ways to offer slightly better price or performance with hopes of gaining a short-term advantage.
EXAMPLES OF BIG BANG INNOVATION
One of the examples is the GPS system. Do you even remember Garmin, or TomTom or Magellan? They were all disrupted by the smartphone - with Google Maps leading the way.
And the smartphone isn't done yet. It has wiped out the wrist watch industry, threatens the digital camera market, the video camcorder market, and even the music and TV industries.
Other examples from the book include:
CampusBookRentals and Khan Academy in education, Pandora and Spotify in radio and recorded music, Skype and FaceTime in voice and video calling, and Square in mobile credit-card processing. These offerings' lightning-fast adoption is a function of near-perfect market information. Wherever customers are, mobile devices let them search a wide range of specialized data sources--including online sites like Yelp, TripAdvisor, Amazon, and other free databases of user-generated reviews--to find the best price and quality and the next new thing.
What's more, big-bang disruptions go far beyond information-based goods and services. Restaurants, for example, now depend on online reservations, customer-generated reviews, e-coupons, and location-based services to drive business.
THE SHARK-FIN PRODUCT ADOPTION CURVE
The traditional product development cycle has been radically compressed:
What this "shark-fin" curve means is that incumbents don't have time to catch up. The crossing-the-chasm story is over. New products are perfected with a few trial users and then are embraced quickly by the vast majority of the market!
Here are some ways in which the world has changed:
The book introduces us to the folks known as truth tellers. These are industry experts with profound insights into new technologies and customer behaviors, who can predict earlier than anyone else when small tremors signal imminent earthquakes. Often, they are people who spend their careers working in the industry, and share a unique passion for its mission, its products and its customers. My term for these guys is thought-leaders, or if you want to be real - they're the ubernerds.
Truth tellers are often eccentric and difficult to manage (no, really?!). They may be found outside your organization--they may even be customers. Learning to find them is hard. Learning to listen to them is even harder.
THE 12 RULES OF BIG BANG DISRUPTION
Another reason to buy this book is the neat methodology they've come up with to introduce this Big-Band Disruption mindset into your company:
I personally don't think our Fortune 100 companies can adopt this sort of thinking very easily, so I'm looking for a lot of them to get dinged severely by the Big-Bang Disrupters, some of which will come to us from India and China.
Still, the framework they present is compelling - especially the part about leaving the market before you get disrupted in the end.
THE POWER OF ECOSYSTEMS
Finally, one of the key elements of Big Bang Disruption is the replacement of the traditional supply chain by dynamic, ever-shifting ecosystems. Again, the culture of most traditional institutions can't embrace openness or collaboration. I've had some experience in that department.
Keep this in mind; I'll be back very soon with a blog post on ecosystem strategy.
One of the reasons why Houston will never get a shot at hosting the Olympics (not that we want it, at this point) is because we don’t have a world-class transportation system. So while Houston is the fourth-largest metropolitan area in the US, we’re not even close when it comes to public transportation (can you believe we’re behind Dallas?). According to the 2010 U.S. Census, we have a population of over 2.1 million people and a land area of 599.6 square miles (and that’s not counting the suburbs).
Houston is second only to New York when it comes to resident Fortune 500 companies.
So what’s the problem? Why doesn’t Houston have a world class transit system at this point in its history? And what can be done?
The traditional finger-pointing is political. Suburban taxpayers who supported referendums in 2003 and 2012 have demonstrated a desire for development, only to have officials shortchange them. The latest in line is John Culberson, but to be fair, past opposition has come from both sides of the political aisle.
And who is behind these politicians? You don’t have to look very far to see that Houston is an energy town - in fact it’s the “energy capital” of the world. Our energy companies are not interested in a world class transit system; for them, seems like widening the freeways is the only solution. This lack of civic leadership reflects poorly on our city and is going to be a burden going forward. Those Fortune 500 companies that call Houston home will find a better place to live.
To be clear: between the lack of leadership from business and the misleadership of our elected officials, Houston has a third rate transit system, used by less than 3% of the population.
There is no long-term plan in place. That, in itself, speaks to the magnitude of the problem. Furthermore, any plan we do get is probably going to be a constrained plan that does nothing to address the real challenge.
What can be done?
How can we bring our politicians and business leaders together? Or is Houston doomed to remain a third-class city when it comes to mass transit?
The reason I wrote this blog post was to highlight a third way. Let’s look at an example from a country and place where things are a lot harder than Houston. Delhi - the capital of India - is a city with 9.9 million, with horrible infrastructure problems. Over the years, like Houston, no real attempt was made to build an infrastructure equal to the needs of the citizens.
Then, in October 1998, ground was broken on a comprehensive metro system that had been talked about for over three decades. Today, the Delhi Metro is the world’s thirteenth largest metro system in terms of length. The network consists of six lines with a total length of 189.63 kilometres (117.83 mi) with 142 stations, of which 35 are underground, five are at-grade, and the rest are elevated. All stations have escalators, elevators, and tactile tiles to guide the visually impaired from station entrances to trains. It has a combination of elevated, at-grade, and underground lines, and uses both broad gauge and standard gauge rolling stock.
What can Houston learn from Delhi? At least three things:
1) build a METRO system worth having: don’t build a system that just clogs up already busy lanes to shuttle folks from one business hub to another. Focus on the real issue: mass transit, specially the mass part. We should aim for getting around 20-30% of our citizens on the METRO during rush hour, and that will only happen if we focus on real solutions.
2) use the right-of-way on existing freeways: the genius of the Delhi rail line is that it is elevated and runs along the main highways already in place. In Houston, this would mean our HOV lanes would be turned into METRO lines - elevated, above the traffic. Even the stations are elevated; which sounds weird, but actually it works very well. The image below is a METROstop along the line - well above the freeway:
3) mass transit is too important to be left to METRO alone: in Delhi, and you have to appreciate the extent of corruption in public office to understand this, a special purpose organization was formed called the DMRC. This cross-agency team was vested with great autonomy and powers to execute the gigantic project. In Calcutta where they did not have such a cross-agency team, the Kolkata Metro was badly delayed and 12 times over budget due to “political meddling, technical problems and bureaucratic delays.” The first phase of the Delhi Metro project was completed in 2006, on budget and almost three years ahead of schedule, an achievement described by Business Week as “nothing short of a miracle”.
So can miracles happen in Houston? They can, if only our politicians and METRO folks would actually share some values - like putting aside their petty interests for the good of the city. I’m not holding my breath. Hey, maybe we can build some more public funded sports arenas; those projects seem to have no problem getting funded!
Here's an interesting classification or segmentation of change makers (from Deloitte) along with some advice on how to make a difference via collaboration >>
Steady Supplier: Combine your contextual knowledge with the Public Value Innovators to create new value
Multirational Multinational: Engage with Citizen Changemakers to gain local insights and ideas
Investors: Connect Wavemakers to amplify impact
Public Value Innovator: Leverage the reach of the Multinationals to reach more communities
Citizen Changemaker: provide feedback to all in order to get to root issues
This is going to be a central theme in business going forward: what is our purpose?
Here’s William Cohen talking about Peter Drucker’s perspective:
“…until Drucker came along most everyone believed the basic “fact” that the purpose of a business was to make money. That is, to make a profit. This belief leads to a corollary, another myth, believed by all—that is, that the goal of any business is profit maximization. Another words, whatever your business, your goal should be to make as much profit as possible. If you accept making a profit as a business’s purpose, the second part just follows naturally. This might even seem worthy to many. To quote Michael Douglas’s famous (or infamous) statement in his role as Gordon Gekko in the 1987 movieWall Street: “Greed is good.” Even today many “know” greed, or profit maximization to be the correct prescription for business success, even if it is amoral or shouldn’t be “good” from a moral perspective. Not so fast, Gordon. As Drucker so often said, whatever everyone knows is usually wrong, Hollywood films not excepted. Drucker told us first that profit is not the purpose of business and that the concept of profit maximization is not only meaningless, but dangerous.”
Now Ratan Tata and gang (myself included) have a similar message:
The problem with industrial capitalism today is not the profit motive; the problem is how the profit motive is usually framed. There is a persistent myth in the contemporary business world that the ultimate purpose of a business is to maximize profit for the company’s investors. However, the maximization of profit is not a purpose; instead, it is an outcome. We argue that the best way to maximize profits over the long term is to not make them the primary goal.
So what is to be done?
What is your company doing to create purpose beyond profits? The future of our planet depends on your answer.
Ever wondered what makes a video go viral?
There are several societal norms challenged in the video. The ad celebrates the second marriage of a woman and includes her daughter. And secondly, the woman is dark-skinned. In a society obsessed with fair complexion, the ad breaks an unwritten rule of Indian advertising. The emotional impact of the ad made it a viral hit, with politicians, citizens, and film stars talking it up on their social media accounts.
Arun Iyer, the creative director, says: “This is the thinking that most progressive people have. They may not be going through the same thing in their life, but the ad makes a bold, progressive, statement and people like to be associated with brands that make such statements.”
The company behind the ad is Tanishq, the largest retail jewelry brand (part of the forward-thinking TATA Group) in India with over 156 stores in 86 cities.
In the US, and specifically in Texas, we have slightly different reasons for emotional contagion: toilet humor.
Now, and this is a good read for the holidays, he's written a book called Ten Types of Innovation: The Discipline of Building Breakthroughs.
You see, most companies focus on just one type of innovation - product innovation. Sure, some of us are looking at service innovation and business model innovation (thanks to Clayton Christensen and Alex Osterwalder), but we still suffer from tunnel vision. Time to wake up and look across the entire scope of our business activities. Where can and should we innovate?
How will your company build it's business innovation portfolio?
Bezos raises the stakes in retail warfare: drone delivery... Are you worried Fedex?
What's wrong with this picture?
According to the Global Innovation Index (GII) - co-published by Cornell University, INSEAD and the World Intellectual Property Organization (WIPO) - the most innovative countries in the world are:
3. United Kingdom
5. United States of America
7. Hong Kong (China)
Other than chocolate, watches, and secret bank accounts, I've never viewed Swiss innovation as leading the world. The same goes for Sweden (IKEA, Abba?) and the Netherlands (Shell).
Why are these countries being hyped as the most innovative countries in the world?
Let's dig a little deeper. Firstly, the index tracks the wrong measures of innovation:
Swiss "innovation" looks like this:
The USA looks like this:
So, let's look at three other "not-so innovative" countries: Brazil, China, and India - yes, they are "emerging markets"...
See the problem? Innovation cannot be measured by number of entries to Wikipedia, or number of papers, or patents, or YouTube uploads.
Rather, it should be measured in terms of innovation (and disruption) - by industry.
Brazil, is the first country where renewable energy accounts for more than 85.4% of the domestically produced electricity used. If that's not innovative, I'll go re-read Heidi.
China? Well, they're China. Every product the Swiss used to make is now made cheaper and of comparable quality in China. Red capitalism rules the business world right now, so that's something of a disruptive innovation, don't you agree?
And India? They've got more scientists and engineers who are hungry to make something happen. India's also the hot-bed for reverse innovation (which does not seem to be on the radar at the WIPO). And they just sent a mission to Mars...
So what's wrong with this innovation survey?
Simply put, it's not based on reality. And it's not an accident that Switzerland is "so innovative," according to this survey - which happens to be sponsored by INSEAD (in Lausanne) and the WIPO (Geneva). The innovation for Switzerland is its opaque banking system (ask China about that: Chinese government officials hold about 5,000 personal Swiss bank accounts with the Swiss global financial services company UBS. Two thirds of those accounts belong to high level central government officials.)
... Wait. There is one true innovation from Switzerland that does deserve a mention: the cap on CEO pay. Let's see if it flies.
Companies and countries that are serious about innovation would do well to not pay attention to this survey, and focus instead on their schools, quality of science education, business transparency, social mobility, gini coefficients, and of course, governance itself (the Corruption Index). See also the Big Shift and A New Culture of Learning.
And if you want to measure creativity, that's going to be something else entirely.
Elvis Presley and Bob Marley as they would look today (h/t these folks):
What can we learn from these lads? These, the young lions, who conquered the world like Alexander, but then had it all taken from them by Thanatos.
One thing you have they don't. And if you escape the sword of Thanatos for a while, you still have to deal daily with his post-modern cousins: Boredom and Anxiety.
He realized now that to be afraid of this death he was staring at with animal terror meant to be afraid of life. Fear of dying justified a limitless attachment to what is alive in man. And all those who had not made the gestures necessary to live their lives, all those who feared and exalted impotence-- they were afraid of death because of the sanction it gave to a life in which they had not been involved. They had not lived enough, never having lived at all.
― Albert Camus, A Happy Death
The man also said, "to have time was at once the most magnificent and the most dangerous of experiments."
Every minute counts. Each year is 525949 minutes. How do you make every minute mean something? How do you escape everydayness?
When Apple announced its plans to bring a 100% renewable energy powered manufacturing plant to Arizona, we would do well to ask why?
The answer is partly to be found in the map below:
1) Proximity to Mexico
There's a Foxconn manufacturing base in Juarez - just over the Mexican border - and it seems like the output from the Arizona plant will end up there.
2) Tax Structure
Over the past 15 years Arizona has demonstrated a "pro-business" mentality combined with a minimalist regulatory approach by reducing taxes and decreasing regulations:
- No corporate franchise of business inventory tax
- Low workman's comp and unemployment insurance rates
- No income tax on dividends from out-of-state subsidiaries
- 80% sales factor on corporate income tax scaling to 100% option
- No worldwide unitary tax
- Aggressive depreciation schedule
- 90 day or less permitting
- Virtually all services exempt from sales tax
- No inventory tax
- No Sales tax on manufacturing equipment
- Ability to carry forward 100% of net operating income for twenty consecutive years
- Small businesses with less than $10 million in assets will not be required to pay capital gains taxes beginning in July 2015
- Right to Work State
Arizona also has aggressive tax credits to reduce state corporate income tax liability. This includes phasing in a corporate income tax rate from 6.9% in 2012 to 4.9% in 2017.
So what does this mean for neighboring states?
It's too early to call this is a new wave of innovation, but it's worth thinking about. How can states like California, Texas, and New Mexico join this solar-shift? Do they even want to?
C'mon, New Mexico!
Apple is to be applauded for bringing manufacturing back to the US. More importantly, they can still think different.
One of the primary reasons for the failure of development projects is that they cannot be sustained. Traditional approaches don’t always work; as soon as the development institutions (NGOs, agencies) leave, things fall apart. Soon the project is either abandoned or simply turned off. This happens all the time with water and energy projects.
One way to work around this and “make it stick” is to involve women in the project. This has been the secret behind the success of organizations like Grameen and the Solar Electric Light Fund. When women lead and control their own destinies, stuff happens. This is a lesson learned in the field, but overall the “development-through-empowering-women” movement is fizzling.
Is there anything else we can think of to make development changes stick?
How about the profit motive?
the solution economy is unlocking trillions of dollars in social benefit and commercial value. Where tough societal problems persist, new problem solvers are crowdfunding, ridesharing, app-developing, or impact-investing to design innovative new solutions for seemingly intractable problems. Providing low-cost health care, fighting poverty, creating renewable energy, and preventing obesity are just a few of the tough challenges that also represent tremendous opportunities for those at the vanguard of this movement. They create markets for social good and trade solutions instead of dollars to fill the gap between what government can provide and what citizens need.
In the book, Eggers presents four specific, scalable business models that are changing the world:
These business models are all very important because they bring the profits into the equation thus allowing them to scale.
But none of these business models solve the problem of scaling the $300 House or for that matter any of the public services the world is crying out for - sanitation, healthcare, water, energy, etc.
As I asked in a previous post on integrated development, why is it too much too ask that governments, NGOs and development institutions, and businesses work together with the communities involved to build integrated solutions?
Here’s how an impact innovation project might work:
Impact Innovation solves multiple problems simultaneously via integrated development
Because of the interrelated nature of the problems that drive the cycle of poverty, the only way to solve these problems is to employ an integrated development model which attacks several challenges at once: clean water, food, health, education, employment, and housing. Housing is delivery mechanism for a better life. This can be achieved using “whole village development” an approach proven by the Solar Electric Light Fund in sub-Saharan Africa. Thus a house is of little value without supporting infrastructure— clean water, sanitation, electricity, waste collection and disposal, basic health, education, and jobs!
Impact Innovation demands collaboration between communities, government, NGOs, and businesses
The key ingredient is trust and solidarity. For example, Partner In Health (PIH), one of the world’s most famous NGOs, believes it is essential to partner with the community. They hire and train local staff. They work with governments to reinforce national health services so more people receive services. They collaborate with other health workers such as traditional birth attendants and government health workers because together they can have a stronger impact. PIH has established a community-based model of care that is now viewed as a leading health-care delivery model in the developed world.
Impact Innovation requires total inclusivity
In the integrated development model, the NGO understands local community problems intimately, the government is responsive to the needs of the community through sound policy, land use arrangements and transparency, and businesses work with both to serve the poor as a customer, partner, employee and supplier. Activities and plans are coordinated, even synchronized. Inclusive growth is driven by inclusive business practices.
When we look at the state of current development projects, we find a curious gap in execution. Because NGOs and government institutions and agencies don’t think of business as a part of the solution, they simply don’t include profit as part of the solution.
So here’s what takes care of this gap:
Impact Innovation uses a hybrid or collaborative business model.
Can governments, businesses and NGOs work together to provide basic services for the poor at an affordable cost? To adopt an analogy from the world of cloud computing, we can think of this integrated model as a “lifestyle-as-a- service.”
Who pays for all of this? Instead of choosing 100% charity or 100% market-based solutions, I’m hopeful in a third alternative: the use of a collaborative or hybrid business model. I started thinking about this thanks to Ashoka’s Bill Drayton and Valeria Budinich (see their Hybrid Value Chain Framework).
So now let’s look at how a hybrid or collaborative business model might be designed to deliver “housing-as-a-service.” We start with a template which shows all the participants and the major process milestones in the service delivery process and adapt it to housing:
Different phases can be managed by different players. For example, a hybrid business model might include a configuration as follows:
In the Design phase, the community works with an NGO and businesses to develop a solution that works for them (this is the hybrid value chain approach from Ashoka!)
In the Build phase, the community works with the business to build the houses they designed in the previous phase. The government may subsidize or donate the land and cost of construction.
In the Finance phase, community members finance their houses with a lending bank that is now a for-profit scheme (under the watchful eye of a government panel).
The Maintain phase may include jobs for the community and training services from an NGO.
And finally, when the time comes to Upgrade, all players come to the table to develop the next solution.
Since infrastructure projects are implemented in phases, they can also be managed in phases. Governments, businesses and NGOs can collaborate to provide basic services for the community at an affordable cost. Imagine if this were to happen across all 638,000 villages in India.
And why should we stop at housing? All public services could be designed, built, financed, maintained, and upgraded using this hybrid business model concept:
I’m doing some research into finding out who is actually doing this already.
Impact Innovation has an employment effect leading to inclusive growth
The hybrid/collaborative-business model allows the community to be involved in each service as a consumer and as an employee or owner. A common enough idea is that building low-cost housing can help create an ecosystem of house builders and suppliers - often members of the community being served. The idea is to transfer that thinking across all the integrated services provided. The hybrid business model can pay for the ongoing employment of community workers for sanitation, energy, education, health, housing, of course, but even something like entertainment, where a member of the community becomes the entertainment entrepreneur, charging a micro-fee for movies or soccer games shown in the village community center, for example.
The Kodak story so far has been rather colorful, but as Kodak emerges from Chapter 11 bankruptcy, it looks like another company altogether. Will it ever shine again?
Gone is the document imaging business (spun off as Kodak Alaris; new owners = Kodak's UK Pension Plan). Instead, the focus is on a new set of markets:
In short, the new Kodak ain't the old Kodak. The key to survival is going to be professional services (watch out Xerox!) >>
Can they do it? How are they going to win? Do they have the capabilities they need?
The search for a new CEO is on. She's going to have to be a consultant's consultant - a professional services expert. Good night, Kodak. Good night, moon. Good luck.
The disruptors are getting disrupted.
In Consulting on the Cusp of Disruption (Harvard Business Review), Clayton Christensen, Dina Wang & Derek van Bever point out the coming disruptive changes in the world of management consulting.
And the big boys are getting ready. McKinsey Solutions, for example, is essentially a business model innovation that could reshape the way the global consulting firm engages with clients. It’s about “embedding software and technology-based analytics and tools providing ongoing engagement outside the traditional project-based model.“ According to Christensen and friends, “McKinsey Solutions is intended to provide a strong hedge against potential disruption.”
So, will software robots replace the consultants?
No just yet, but the authors warn that the threat from smaller, more nimble competitors is real:
At traditional strategy-consulting firms, the share of work that is classic strategy has been steadily decreasing and is now about 20%, down from 60% to 70% some 30 years ago.
Wow. That’s some serious disruption, don’t you think? Clients are focusing on value-based pricing instead of per-diem billing. (And not a moment too soon!) If you’re engaged in any kind of consulting work, or even services, you would do well to buy the article. (As a bonus, you get to learn how the legal market got disrupted!)
Here’s a sample of their thinking: the three consulting business models observed and cataloged:
New upstarts like IDEO bring a collection of skills and capabilities not found in traditional firms. They bridge “the disciplines of industrial design and innovation consulting… Its unique mix of talent and strength in solving interdependent problems makes it hard to imitate.”
Christensen, Wang and van Bever point to the model of IT services as a threat as well. Emerging market competitors like Tata Consultancy Services and Infosys. (I’m not so sure.)
IMHO, the big boys have been asking for trouble. By focusing on harvesting and/or fleecing clients, they left the doors open for nimbler and more insightful competitors. I think there’s one more business model that may have been overlooked: the individual, branded consultant.
Now, more than ever before, companies want to connect to the originator, the source of an idea - instead of going with organizational middlemen. Thought-leadership translates to market leadership. Some of the big firms are hiring these gurus to harness their I.P. but the list of independent, disruptive gurus is growing fast.
Here are some examples of how specialized individuals (gurus) are taking over markets from the big firms because of their specialized expertise and insights >>
- Peter Drucker - The Original D-I-Y management consultant (R.I.P. Peter!)
- John Hagel III* - Big Shift + edge strategy (now with Deloitte’s Center for the Edge)
- John Seely Brown* - Education and Learning (he works part time for Deloitte’s Center for the Edge)
- Tom Davenport* - Competing on Analytics
- Stuart Hart* - Sustainability and B.O.P.
- Vijay Govindarajan* - Reverse Innovation
- Tammy Erickson* - Talent Management
- Marshall Goldsmith* - Leadership
- Dean McMann* - Customer Intimacy
- Mo Kasti* - Physician Leadership (see, it’s getting hyper-specialized!)
The list just goes on and on:
- Larry Keeley - Innovation (with Doblin, acquired by Monitor, then Deloitte)
- William Eggers - Government Solutions (with Deloitte)
- Jakob Nielsen - Usability
- Roger Martin - Strategy
- Alan Weiss - Pricing
- Seth Godin - Marketing
- Dan Kennedy - Entrepreneurship
- Perry Marshall - Internet Advertising
P.S. - here’s an interview with Clayton Christensen done over 10 years ago. We talk about disrupting the consulting industry in passing!
Discovered in an attic in Norway:
I showed my support by building Jim's website.
The incumbent is a Republican guy who doesn't believe in public health. He's against child immunization, apparently.
After getting a few emails about this article in the Guardian, I went back to Professor Clayton Christensen's op-ed in the New York Times (h/t Derek Van Bever) and asked myself this question: What kind of innovation is the $300 House really?
I went through the "types" of innovation as described by Christensen:
Empowering Innovation: transforms complicated and costly products available to a few into simpler, cheaper products available to the many, thus creating jobs, because they require more and more people who can build, distribute, sell and service these products. Empowering investments also use capital -- to expand capacity and to finance receivables and inventory.
Sustaining Innovation: replaces old products with new models, but creates few new jobs; such innovation has a neutral effect on economic activity and on capital.
Efficiency Innovation: reduces the cost of making and distributing existing products and services. Such innovations almost always reduce the net number of jobs, because they streamline processes, reduce capital investments, and eliminate waste.
So what about the Base of the Pyramid? What about the non-customer, the folks (generally poor) that are always under-served?
The result? Let's define a new term: Impact Innovation - which like Impact Investing - seeks to make a difference.
Impact Innovations are innovations which:
1) solve a major problem (or several major problems simultaneously)
2) are sustainable
3) are affordable (may include hybrid business models)
4) serve the non-customer (new markets that did not exist before).
5) build an ecosystem of products. services, and experiences around the innovation
None of this is especially new, but the language we need to describe the problems we are facing is.
My point is simple: this is going to be the future of development. Governments, non-profits, and business will have to work together. Either that, or we're in serious trouble.
Becks walks off the pitch in his last home game for PSG. Say what you want, but the man was hardworking, loved the game, inspired his team, won big (except for the World Cup - sorry Three Lions!), and
was is a marketing wonder:
Funny, isn't it, that Beckham and Alex Ferguson leave the game together?
This will be quick. Sometimes when you have a bad customer experience at a store, you can whine and complain, display 6 types of anger all at once, or just blog about it, as I'm choosing to do here.
So there I was, out with friends, a couple and their kids, ready to see the new Star Trek movie. We got to the theater early, early enough for me to get some snacks. I went to buy two icees and a bucket of popcorn.
I got a blueberry flavored icee and the popcorn, and they sold me an large, empty cup but told me to come back in 10 minutes for the coke-icee. I noticed the manager was cheerfully reciting a limerick: "There once was a man from Nantucket."
I came back ten minutes later. The coke icee wasn't ready, so I wandered off again came back 5 minutes later. This time, I passed my shiny cup over, and asked for the cherry flavor, since the coke was still freezing... and that's when things got interesting.
The guy took my clean empty cup with a lid on it, wheeled around, and held up another cup - one that was clearly wet - filled with droplets of something and something like "I just dropped your lid, but let me fill up your cup."
I was surprised and said: "That's not my cup. My cup was dry. That's not my cup, and you know that."
He insisted: "That's the cup you just gave me."
I replied: "Don't do this man, you know what you did."
At this point the limerick-manager comes over and says: "That's the cup you gave him. Don't talk to him - I'm the manager, talk to me about it."
I explained again: "I gave him a brand new cup. The one he's got is wet. It's used."
The "manager" turns up the volume and says: "That's the cup you gave him."
Flashback to high school - back when I worked at a theater in the summers. I realize what's going on. The concessions staff is measured by the cup. They sell cups, not drinks. So each cup is worth 5 bucks. I know that's how the movie theaters make their money - from their concessions.
I said: "All right. What's your name and may I take your picture? You know this is wrong."
The "manager" replied in a disdainful tone: "My name is Brandon. And go ahead, take my picture."
I did (see art-photography above).
He then said: "I can give you a new cup. Give him a new cup."
To which I replied: "Do, and can I please watch you get my drink?"
The "manager" proceeded to fill my drink with style and a flourish of his hand.
"May I have a straw with that?" I asked.
The "manager" handed over a straw slowly, with another flourish.
I asked him his name again, to which he said "Brandon Phillips, and I will see you on the screen."
I wonder what that means.
So basically that's my story. The fact that the "manager" was "in" on the sell-the-dirty-cup trick means one of the following:
a) employees are punished for losing cups, i.e. filling out a lost cup report is held against them,
b) employees are making extra money selling used cups,
c) the practice is part of the business model, and it's just how they make better margins.
Regardless, I have decided to never buy anything from the movie concessions ever again.
Brand destruction lesson: don't mess up on trivial stuff and then treat your customer like an idiot. You will loose the customer for life.
Do the math, Cinemark.
On January 19, 2012, Kodak, the once iconic US company which had democratized photography, filed for chapter 11 in the U.S. Bankruptcy Court in the Southern District of New York.
To the millions of lives and memories touched by Kodak over the years, the news may have come as a huge surprise. But to those who make a living following companies' growth or demise, there was zero surprise. Kodak's ties with its customers had been weakening over the years - when Kodak was synonymous with amateur photography. Now, customers, both new and experienced, were choosing to bypass Kodak altogether. Simply put, Kodak had nothing to offer them; nothing valuable enough anyway, for them to stay.
So, what happened? How did a company that once owned the hill tumble down and lose its crown? Let's see if we can understand what happened.
When George Eastman decided "to make the camera as convenient as the pencil" which is how he explained Kodak's value proposition, he literally transformed our lives by introducing us to our personal "Kodak moments" - the memories that the individual captures as a way to celebrate, share, and communicate our most precious memories with our friends and families.
Kodak was the Apple and Facebook of its day because Eastman understood what customers valued. He realized that technology could change markets - overnight. And of course, that is precisely how he started Kodak - by creating the dry-plate technology which made photography accessible to all.
But Eastman could have easily failed to see the significance of the new. He could have stuck to his profitable business model, hypnotized by the massive profits his dry-plates produced for Kodak. He could have failed, but he did not. In fact, he bet the company not once, but twice, and both times he won because he kept stuck with his imagination - he clearly had the capability to envision how the right technology could transform the customer experience for the better.
The first time Eastman bet the company was when dry-plates were threatened by a new technology. Eastman gave up on his dry-plate business to pursue a promising new technology developed by Kodak - film. Eastman's first simple camera in 1888 was a wooden, light-tight box with a simple lens and shutter that was factory-filled with film. Priced at $22.00, the world was forever changed.
Later, Eastman faced another existential Kodak moment when he again bet the company's future on color film, which at the time was not as high in quality as the established black and white.
Eastman built the Kodak empire on a deceptively simple "razor and blades strategy," selling inexpensive cameras and making money on the back end on film and printing.
So what happened?
The inexpensive business historian known as Wikipedia tells us that the problem with Kodak was that its "unassailable competitive position would foster an unimaginative and complacent corporate culture."
In 1975, a Kodak engineer - Steve Sasson - invented the digital camera. But this time Kodak was no longer the Kodak of George Eastman. As Sasson desperately wandered around the company trying to convince senior executives of the potential of his discovery, he was met with the mindset of a company in love with the present. Sadly, there were no George Eastmans left at Kodak.
His presentations "met with a lot of curiosity, some annoyance." According to Sasson, "Many times people talked about all the reasons why it would never happen. But there were many people that quietly looked at it and said, 'Boy, it's a long time, but I don't see that it won't happen.'"
As Kodak "fumbled the future," Japanese firms like Sony leapfrogged Kodak, establishing a lasting reputation for inexpensive digital cameras.
At the time of its bankruptcy filing, Kodak gave several reasons for taking such drastic action: "to bolster liquidity in the U.S. and abroad, monetize non-strategic intellectual property, fairly resolve legacy liabilities, and enable the Company to focus on its most valuable business lines." In the same release, Kodak also stated that they had "made pioneering investments in digital and materials deposition technologies in recent years, generating approximately 75% of its revenue from digital businesses in 2011."
So while Kodak eventually got serious, and become the world's leading seller of digital cameras, it had lost its profit engine. The "razor and blades" business model had evaporated. Without profits driven by the sales of film, Kodak was in a black hole of its own making.
Two other fatal flaws can be observed in hindsight.
The first was Kodak's hubris in terms of marketing. As Adrian Woolridge wrote in his Schumpeter column, Kodak made the fatal mistake of "competing through one's marketing rather than taking the harder route of developing new products and new businesses." As we'll see, its competitor Fuji Films - facing exactly the same predicament as Kodak - has managed to survive and thrive in the same business climate that drove Kodak to ruin.
The second fatal flaw was, in my view, the mindset of the executive team. In 1989, the board placed the wrong bet when they chose Kay Whitmore as CEO over Phil Samper. Whitmore was a hardliner - a veteran of the traditional film business. Samper (the digital "hope") left to join Sun Microsystems. Three years later, the board fired Whitmore, and then went on to institute a revolving door policy which saw a line of CEOs fail one after the other.
To this very day, Kodak has an identity crisis: it does not understand who its customer is, and in its dithering, it no longer knows what Kodak is. The current Chairman and Chief Executive Antonio Perez is an HP printer executive, and has predictably steered Kodak toward consumer and commercial printers.
He says that the bankruptcy will help Kodak maximize the value of patents related to digital imaging. The final strategy? Litigation. According to Reuters, Kodak is trying to create new revenue streams using extensive litigation with rivals such as Apple Inc, BlackBerry maker Research in Motion Ltd, South Korea's Samsung Electronics Co and Taiwan's HTC Corp.
The failure of Kodak is a failure of management imagination. It is the failure of the executive mindset that no longer is connected to the customer.
The sad truth is when you take a photo today, Kodak is not part of the picture.
Kodak's story is neither peculiar, nor unique. To attribute its crumbling relationship with customers to a single disruptive technology or market trend - example, digital transformation, would be overly simplistic. What happened to Kodak is a failing that repeatedly expresses itself in countless companies across the globe. They lost touch with their customers.
Cynthia Freeland's book - But is it art? - came out before Arthur C. Danto's - what art is - in fact he endorses it on the front cover (sort of) - but then he tries to one up her with a sincere form of flattery = his own take on the subject.
As a fan of Danto, I have to say his book is "pretty good and all," but I'm embarrassed at what the publisher did to him (or perhaps he did it to himself) by copying the "look and feel," to use the language of design, of Freeland's remarkable book.
Maybe Danto/Danto's publisher was reading this at the time:
Still, I think both books have their place.
Freeland's book is more accessible (which is ironic since she's a philosopher) and Danto's book is pretty Hegelian and over-philosophical (but then he's a philosopher too and an art critic).
Freeland sees art with the glasses of an aesthetic - she examines the various theories of art in an entertaining, non-academic, journey through time and space. What can we learn from how art is exhibited? How much it costs? Who or what is an artist? How do we assign meaning to art? etc. etc.
Danto insists that art is a trinity - meaning, embodiment, and interpretation. This is straight out of Charles Sanders Pierce, and while he hints at it, Danto doesn't acknowledge it. Maybe he didn't read Walker Percy's "Toward a Triadic Theory of Meaning" in The Message in a Bottle. Or maybe he did, but I doubt it.
What I find interesting that both books don't mention the grave danger facing art - the mechanization/digitization of the process of production of art. In my view the danger is the same one Hundertwasser saw when he said that straight lines and photography are the end of art.
Everyone must be creative, said Hundertwasser.
Otherwise, I add, you will become a living, programmable machine. Most of us already are without knowing it. Our modern rituals - shopping, moviegoing, television, gaming, rob us of our creativity and make us passive consumers of machine optimized reality. Art and Big Data collide. Art loses. Profits win. Design destroys art.
Art is the fight to not be a machine. To not have to follow reason. To not have to be a consumer. To say no. The "artistic suspension of reason" lets call it. Or even: "the artistic rejection of profit."
Art is what keeps us human. Irrational, yet human. Art is love. There, I said it.
The predictable, strategic failure of Nook is now on the front pages of dead-tree media. Despite Nook's problems, Barnes & Noble Chief
Executive William Lynch said the company "remains committed" to the
Nook devices. He's on his way out.
What Barnes & Noble needs to do is think.
Barnes & Noble has to remember what it is.
Here's what it is not:
- a Christian book store
- a video-gaming parlor
- a coffee house
- a stationery store
- a toy store
Who will save Barnes & Noble for us? Watch your customers, B&N!
How's it going J. C. Penney?
The Productization of Bob Marley is one of the saddest moments in his career. Bob Marley has become Babylon. I guess even revolutionaries get consumerized... See my 2009 post on the monetization of Bob Marley. The reality is worse than I feared.
R.I.P. Bob! Even though your family seems to have sold you out, your music will do the heavy lifting - dreader than dread.
Once again, I make a fool of myself… Can you be a 33% Sanyasi?
How do you build an ecosystem of resources and assets around a physical community?
That's the question I've been struggling with for the past few months. During my recent trip to India, I found there were varied answers to the question, ranging from "it's the government's job" to "the community will have to do everything for itself." I finally heard the answer I wanted to hear from the dynamic leaders of an emerging Indian giant. Over breakfast they told me that they were trying to build the right ecosystem around a rural village, and they were serious about building employment opportunities into the village itself.
Back in the USA, retired research biologist Marlene Warner gave me a book yesterday which made me sit up. It was John McKnight's The Careless Society: Community and Its Counterfeits. In it, McKnight talks about diagnostic and anti-diagnostic ideologies.
This diagram is diagnostic; it points out needs and deficiencies, and turns citizens into consumers of medical social and service systems:
The second diagram is anti-diagnostic; it creates a map of capacities and assets, and empowers citizens, associations, and enterprises. The author says it can be a resource magnet.
A synthesis of these two maps is needed, says McKnight. These diagrams have to be integrated to build an integrated development model, and the community must be involved in the creation or co-creation of its future.
The legendary reggae band releases the 2012 version of the Barack Obama Song >>
The 2008 video version is here >>
I know what some of you are thinking - "Well, did America have a soul to begin with?" I happen to think it did. For me the soul of America is "We, the people..."
Furthermore, I'm quite sure that people, as defined by our founders, did not mean corporations. (See what Charles Handy has to say >>)
But to get back to the topic of inclusivity, I'd like to make a shameless plug for our new book, co-authored with University of Michigan's Professor Michael Gordon, called Inclusivity: Will America Find Its Soul Again?
BUY now >>
- How can companies take better care of their employees--and thrive?
- Why don't they see the opportunities in creating social value?
- Do Americans think we have a fair distribution of wealth?
- What are new means of putting our collective talents to work?
- How can communities take the lead in creating opportunity?
- How can public education prepare all students for the future?
- How can better health care be made available without doctors?
- How can communities do something about global warming?
- How can you make a difference?
- Why should you care?
Inclusivity: Will America Find Its Soul Again is a book of questions, hints, and suggestions about creating more opportunity for more people--starting with the USA, but looking at and learning from the rest of the world.
The very idea of the "United" States is based on the principles of inclusivity--all men and women are created equal under the law. But we seem to have lost our conviction that inclusivity is possible or even to be desired. The current divisive political climate, along with economic uncertainty, has fostered an atmosphere of fear and narrow-mindedness across the country.
What can we do in the face of this reality? The choice is not easy, but it is clear. Either we will decide to be more inclusive, or we will turn against each other - finding reasons to divide ourselves, not just from each other as citizens, but also from a shared future.
The USA, unless we decide otherwise, will become simply the SA.
This book is dedicated to an inclusive future for all our children, including my daughters M and K, and the idea that the United States is still the last best hope for democracy and inclusivity. We won't have one without the other.
The book includes the following sections:
- What Is INCLUSIVITY?
- Inclusive World
- Inclusive Entrepreneur
- Inclusive Economy
- Inclusive Cities
- Inclusive Education
- Inclusive Health
- Inclusive Leadership
- Inclusive Future
P.S. - We don't want this, do we?
I go to my local bookstore, drink a coffee and
browse the shelves. When I get home, I rush to the computer and buy the books I
fancied - online! If it's a business
book, I download a copy on my digital reader, and if it's a literary
work, I buy the physical book at a discounted price.
As a way to assuage my guilt, I've thought of some ways to help my local bookstore survive - because, like so many of us, I love the physical bookstore experience - nothing beats the Zen practice of disinterested info-grazing - and I'd like to continue to enjoy it.
However, I notice at my local Barnes & Noble that
they're busy selling Nook ereaders in every cranny. [Do they really think they
can compete with the iPad or even Kindle?] Is this really going to save the
physical store? Nope.
Most likely, it's an idea dreamt up by the financial types at headquarters who've been "missioned" to tap into the digital value-stream. After all, why should B&N just stand there and watch their profits drift lazily down a South American river? It's important to note that despite B&N saying the Nook is a "success," they still rely on brick and mortar stores (retail and college bookstores) for over 75% of their revenue and the competition is going to become even more intense with dozens of new tablet and reader devices being introduced this year.
And how does B&N take a trip down the Nile? Apparently, the secret sauce is that they allow Nook owners to take their devices into any B&N physical store and read any e-book for free. Nooktalk tells us that in reality, it's not exactly a seamless reading experience. And now that Amazon allows Kindle owners to "lend" books to each other, the Nook may find itself in the, ahem, corner.
So what can your local bookstore do to take advantage of its strengths?
Here are three suggestions to shake up the physical bookstore business model:
Daily Book Rental
Why can't the bookstore become a pay-as-you-read library? As a kid growing up in India, I remember borrowing books (alright, some these were Asterix and Tintin comics) from the bookstore for a daily fee. This business model shows some reverse innovation promise. Can you imagine "tiered pricing" linked to free coffee rewards? Sign up for the all-you-can-read buffet. And of course, we get to pay fines if we return our books late.
Distribute Local Books
What if a physical copy of your book gets published in-store and sold in your town's bookstore? Can you visualize a "Newbie Authors" section where one copy of your book gets to sit on the shelf for a week? If it doesn't sell in a week, you can either pay for shelf space or you can buy your books back. The minute you or your mother buys your Great American Novel, a new one is printed and placed on the shelf. The top 5 bestsellers in each town get national distribution and placement for a week. Book fest!
- Healthy Living
- Food + Wine
- Art History
How does a bookstore do this? If you're Barnes and Noble, you could hire retired teachers to do this; pick people who are enthusiastic and spread their love of the subject. If you're a small bookstore, you can still find enthusiastic community leaders to do the same - in fact you can specialize, and create a niche around the main clientele in your store.
Does all of this sound a bit off the wall? Good, then it's worth a try. The Nook, I'm sorry to say, isn't going to save Barnes & Noble.
P.S. Over at HBR, Sarah Green gives us another suggestion: Amazon should partner with Independent Bookstores!
Michael Gordon's book, Design Your Life, Change the World: Your Path as a Social Entrepreneur [A GUIDE for CHANGEMAKERS] is for changemakers - the people and organizations that want to make a difference in the world.
The book tries to answer two questions, says Professor Gordon:
1) How can organizations best address important societal problems such as poverty, inadequate health care, sub-par education, and an unhealthy planet?
2) What's the best advice for students who want to address these issues and still live lives of relative comfort?
The reason I'm helping the professor is because now, more than ever, we need the brightest students to tackle the world's biggest problems. And the oil-coal-nuclear lobby isn't making things any easier...
Are you a changemaker? Go find out >>
P.S. - you can download the PDF version here >>
No one could have known that when a Tunisian fruit vendor set himself on fire in a public square, it would incite protests that would topple dictators and start a global wave of dissent. That's the power of ecosystem disruption. The power of the Voice of the Planet (VoP).
I don’t watch TV much but I just caught a clip of Richard Branson promoting his book Screw Business As Usual. Looks like he’s on the same page as Stuart Hart - who has been essentially saying the same thing for twenty years. They ought to compare notes!
What was funny was watching Branson sit there as the producers had him wait and wait for his three minute interview. He was clearly in distress - the anguish of the entrepreneur who can’t bear to waste time - as he smiled and waved every time they turned the camera on him.
The book is available later this month… have a Happy Green Christmas!