January 2008 Archives

The latest in a series of Innovation on the Edge articles to appear in BusinessWeek, Catching the Innovation Wave is a clever lesson in how innovation occurs at the relevant edge.

John Hagel and JSB ask executives to:

1. "find relevant edges that will test and push their current performance."

2. "attract motivated groups of people to these edges to work together around challenging performance issues."

3. "recognize that the people who are likely to be attracted to the edge are big risk-takers."

4. "recognize that the edge fosters not just risk-taking, but very different cultures that are also 'edgy.' "

5. "find ways to appropriate insights from adjacent disciplines and even more remote areas of activity."

6. "bring users and developers of technology close together."

7. understand "the loose practice network that evolved around big wave surfing." Performance breakthroughs occur "when seasoned practitioners engage with the technology, especially in close-knit communities, and evolve their practices to better use it..."

Watch the surfing slideshow here, and read a longer version of the article on John's blog >>

Years ago, I was one of the youngest employees to be invited (to this day I still don't know who nominated me) to speak at Bechtel's Management Advisory Seminar - a yearly gathering of top managers and staff to discuss the topic of innovation.

While this was supposed to a great honor, it turned out to be a lot of work. It was a day-long affair, and I was to give two speeches. One on "Innovation in Marketing & Sales," and the other was something like "Innovation in Being Global." So there I was, the only one foolish enough to be suckered into making two presentations with about 400 people in the room.

As usual I talked too much, waved my hands around too much, and irritated the heck out of the head of our regional office. After the presentation was over, no one had any questions. Later, the head of the office actually asked me to explain everything in a written memo to him.

We never talked about innovation again, but he must have liked my writing style because I ended up doing some serious speech writing for him and a few other senior managers.

That was the extent of my encounter with innovation in the staid world of engineering and construction.

"At least they let you speak," said one of my supervisors when I asked why no one cared about my recommendations.

So why did no one pay attention in an official capacity? Why is it that everyone praised me in private, and patted me on the head in public, dismissing me as "that passionate fellow"?

Gary Hamel's blog post "Making Innovation Everyone's Job" helps me understand why years later.

Here's what Hamel says:

... it’s surprising that so few companies have made innovation everyone’s job. For the most part, innovation is still relegated to organizational ghettos—it is still the responsibility of dedicated units like new product development and R&D, where creative types are kept safely out of the way of those who have to “run the business.”

Today innovation is the buzzword du jour, but there’s still a yawning chasm between rhetoric and reality. If you doubt this, seek out a few entry-level employees and ask them the following questions:

1. How have you been equipped to be a business innovator? What training have you received? What tools have you been supplied with?

2. Do you have access to an innovation coach or mentor? Is there an innovation expert in your unit who will help you develop your breakout idea?

3. How easy is it for you to get access to experimental funding? How long would it take you to get a few thousand dollars in seed money? How many levels of bureaucracy would you have to go through?

4. Is innovation a formal part of your job description? Does your compensation depend in part on your innovation performance?

5. Do your company’s management processes—budgeting, planning, staffing, etc.—support your work as an innovator or hinder it?

Don’t be surprised if these questions provoke little more than furrowed brows and quizzical looks. Truth is, there are not more than a handful of companies on the planet that have, like Whirlpool, built an all-encompassing, corporatewide innovation system.

Ouch. Innovation wasn't supposed to happen from the ground up at Bechtel, it was top down. I had crossed the boundaries of the culture of the time. And that's the point at which I decided I had to leave.

I stuck around for a year or two more - helping build the Bechtel Intranet, working on a company-wide reengineering project, sending a few emails to Riley Bechtel, meeting Fred Gluck, making a few people mad. For some reason, I loved it all.

My seven year "career" at Bechtel ended when I left to teach high school math (that lasted for a year) and never returned to the engineering world again. So much for innovation.

I still look back at my days at Bechtel as a great experience which prepared me for the Internet and consulting in a way that I could not have experienced if I had been an outside-consultant. I saw what worked and why. I understood culture and its contribution to decision-making. I learned about fear and resistance to change. I made a lot of good friends, some of whom I still look up to this very day.

And, most of all, I learned the importance of working for myself.

Here's more from Hamel >>

Almost every day I get an email from someone asking for "the simplest way to use double loop marketing."

And I ask them: "Are you blogging yet?"

The simplest form of double loop marketing is the double loop blogging model. It is best used to establish a thought-leadership position - generally embodied by the CEO or a senior executive in the company who is either an expert in the field already, or wishes to establish themselves as one.

It works for large enterprises talking to the masses although it is more effective for SMBs and non-profits targeting a specific audience in their industry.

The four components of the double-loop blogging model are as follows:

1. Thought-Leadership Blog
Goal: Build mindshare
This is the most important component of the double loop marketing model in terms of attention management. The blog helps you establish your credentials and build a relationship with readers. With a few exceptions, it helps if you blog regularly covering topics which entertain and educate. Relax, and be yourself. Be authentic. Don't blog if you see it as a chore.

2. Vendor Site
Goal: Sell products and services
This is the "second loop" component of the double loop marketing model. The job here is conversion to sales. If you don't make it easy for customers to buy, they wont. The focus here is helping customers buy with the least amount of hassle. Trust is established through the testimonials (and case studies) of name brand clients. The buying process must be as simple and clean as possible. Support and post-sales interactions are critical to building profitability with follow-on sales. The post-sales funnel must be designed before you sell your first product.

3. Newsletter
Goal: Trust Building & Conversion
Your newsletter is the best way to build loyalty and drive prospects back to your "vendor site" every month. Despite the rumors you may have heard, email is far from dead. Our clients experience a 25-30% boost in revenue each month from their newsletters. The newsletter must be a thought-leadership vehicle, not a sales-driven tool. This makes it an effective vehicle for viral marketing: everytime you send out your newsletter, more people opt-in and become a part of your list. This is the simplest and most effective way to escape the tyranny of search engines and the PPC game.

4. Management
Goal: Process Optimization & Ecosystem Positioning
The management of the three elements mentioned above is a process unto itself. It's function is optimization - finding and turning prospects into profitable customers at the lowest possible cost.

This component includes devising an ecosystem positioning strategy for the blog, conversion strategies for the vendor site, and opt-in and delivery strategies for the newsletter. All aspects of execution must be tracked and measured against a baseline to continuously improve performance.

Pretty simple, isn't it? So why aren't you blogging yet?!

Dominic used to run FORTUNE's blog called The Business Innovation Insider, but they decided, in their infinite wisdom, to kill it.

Brilliant. What stupidity!

Thank goodness he started his own blog. I have to say Dominic Basulto's blog is quite simply a great gift for all of us! Thank you Dominic.

The Marshall Goldsmith Show

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Someone needs to put Marshall on Late Night TV. He's better than most comedians and infinitely more useful!

Check out this hour-long video of Marshall in action with the nerds at Google >>


The Economist tells us that Hyundai almost yanked its Super Bowl advertising due to economic concerns. At the last minute, they decided to stay put.

Yank it, I say. And spend the money advertising on the Internet!

The article goes on to tell us that: "Marketing spending is one of the first things companies decide to cut when faced with slowing sales."

This is true, but only when companies don't understand marketing. Which means despite what Maurice Lévy at Publicis Groupe and Sir Martin Sorrell at WPP are saying, look for a crash in marketing spend.

The NY Times tells us "Forecasters Say Madison Avenue Will Escape a Recession, Just Barely."

I say they're wrong.

We know that the research tells us that recessions clearly reward aggressive advertisers and destroy timid ones.

In a study of U.S. recessions, McGraw-Hill Research analyzed 600 companies covering 16 different SIC industries from 1980 through 1985. Results showed [hat tip to MacTech] that business-to-business firms that maintained or increased their advertising expenditures during the 1981-1982 recession averaged significantly higher sales growth, both during the recession and for the following three years, than those that eliminated or decreased advertising. By 1985, sales of companies that were aggressive recession advertisers had risen 256% over those that didn't keep up their advertising.


Sales for the companies studied were relatively even before the recession, but varied sharply during and after. Companies that cut advertising during both of the recessionary years maintained flat sales during the period and only modest sales growth in the following two years. In contrast, the companies that maintained their advertising experienced significant sales growth throughout the four-year period.


According to the study and contrary to popular belief, cuts in advertising during a recession decrease net income over the long haul. Companies that maintained advertising during the recession enjoyed measurably higher net income gains not only during the recession, but even more so, two years after the recession. This in stark contrast to those companies those companies that cut advertising both years and significantly reduced their profits during the recession, and for years following.

On top of that, my friend Sundar Bharadwaj insists that "the impact of branding on firm performance outweighs both the impact of the competitive environment and resource allocation."

But that, ladies and gents, was before the Internets.

Now, we're going to see something we've never seen before. The end of advertising as we know it. If the Olympics go south, as they just might especially given the lame coverage we've seen in the past, I expect that TV will be hit hardest, followed by print - magazines and periodicals.

Radio will stay flat, and the biggest (and only) gainer will be online advertising.

I'm convinced we're going to see a boom in marketspace analytics.

Smart money will focus on ecosystems. They'll know exactly where to advertise to get the best response to drive quarterly results.

Ask yourself:

- Are we in the right ecosystem to begin with?
- Who are we competing against really? (versus who we believe we are competing against)
- Where do we stand vis-à-vis our competitors?
- Who else is in our ecosystem? Are they neutral, friends, or enemies?
- What are the microtrends? Are we gaining or losing on the competition?
- What are the keywords being used to dominate our ecosystem?
- Are there any potential partners in the ecosystem we want to compete in?
- Is our target demographic well represented in our actual ecosystem?
- Do we need an offensive or defensive strategy to challenge the competition? Can we do both?
- Where does the traffic for our ecosystem come from? Is it global?
- What must we do in the short-term to compete? What about the long-term?
- Where should we be advertising?
- Can we dominate our industry ecosystem?

Welcome to ecosystem marketing.

What happens when you work 24X7 for 30 years? You may become Ram Charan.

When I think of Ram I think: "here's a Peter Drucker without imagination."

On one hand this is a flaw. On the other hand, it is also his strength. He has shown a remarkable ability to focus like a laser on the business of business. But along the way he may have forgotten how to live. Ram Charan has lived on the road for 30 years - no home, no family. That's some focus.

Now listen to him on the video as he reveals the "6 secrets of execution."

The 7th one is obvious: "Life is Work, Work is Life."

Here we go again.

The World Bank is busy funding the destruction of the Amazon rainforest, alleges this article in The Independent.

The World Bank has emerged as one of the key backers behind an explosion of cattle ranching in the Amazon, which new research has identified as the greatest threat to the survival of the rainforest.

Nice. I wonder if this story will be picked up by the "corporate media" in this country. Not if Britney Spears has another nervous breakdown...

Now let's see... who was the bright guy in charge of the World Bank when this policy was put into place?

Why, none other than our good friend Paul D. Wolfowitz - the mastermind who took us into Iraq.

Good luck going green Mr. Zoellick!

Here's what happens when combine my favorite band (Steel Pulse) and my favorite politician (lyrics below). In a corny sort of way, this actually explains Obama's appeal in a way the pundits cannot.

Make Us a Nation
by Steel Pulse

Chorus:
Yes we are, we gonna make us a nation
That's based on truth and rights over one groundation
Yes we are, we gonna make us a nation
Of equality and justice and one iration

Wake up from your sleep and slumber
Let's rise up in numbers
Time for liberation
No time for segregation
You know and I know war is not the way to go
Got to be wise and be civilised and let love flow
Let's go, oh yes

Chorus

Its greed and jealousy
Separating you and me
And all this tribal war
Zapping all our energy
Cause I've got a plan and I'm sure that we can
make it work
Unity is strength, solidarity is all its worth I yearn

Chorus

Equality and justice no more fuss & fight
Gonna make us a nation, gonna make us a nation
Gonna make us a nation oooh!
Gonna make us a nation, gonna make us a nation
Gonna make us a nation oooh!

Chorus

Equality and justice no more fuss & fight
We can make it work for what its worth
Right here on earth its red alert yeah!
A little bit of love coming from the heart
A little bit of love coming from the heart
A little bit of love coming from the heart
A little bit of love coming from the heart
Yeah heh! heh!
Cause all I want is to uplift my nation
To make them walk with pride among creation
Yes! Yes! Yes!
Easy, easy, easy, easy
Yeah
No more fuss and fight
No more fuss - no more fight
No more fuss and fight

P.S. - Check out Bill Dunk's view on the Obama phenomenon>>

For those of us who say that Obama doesn't have the experience to lead us in foreign affairs, let me just remind everyone that it's not experience that counts but judgment. Unlike Dubya, Rumsfeld, Cheney and gang had plenty of experience, but they lacked judgment.

And it was this lack of judgment which led us into Iraq, diverted our attention and resources from Al-Qaeda, and ultimately caused severe damage to our relationships with allies like Germany, France, and yes, England (just ask Tony Blair). And that doesn't take into account that we've dropped the ball on nuclear non-proliferation, Pakistan, Russia, North Korea, Iran, and Saudi Arabia.

So how does a President reach out to mend fences?

It helps if they are liked.

Remember JFK's "ich bin ein Berliner" line? Well, now the Germans have taken a liking to Obama. Check out these headlines:

- Lincoln, Kennedy, Obama Frankfurter Rundschau

- Der neue Kennedy Berliner Morgenpost

- Dieser schwarze Amerikaner wird der neue Kennedy! Bild

Even the French are into it:

- Obama Superstar Le Monde

In Spain:

Barack Obama: "El cambio ha llegado esta noche a América" El Pais

And how about the UK?

- The first caucus of the revolution Financial Times

- Groundswell for Obama leaves Clinton campaign on the rack Guardian

- The White House? Political earthquake propels Obama towards presidency Independent

- Hope and experience gave Obama the edge Telegraph

- Iowa voters hail 'turning point' BBC

Finally, in India, of course the Indians are taking credit for Obama's victory:

- South Asian organisation a factor in Obama's success in Iowa Times of India

So much for experience. It's change, stupid.

The video evidence tells us a new America is dawning:

Are we seeing the end of smash-mouth politics? I hope so.

What does it say for ABC when you can download the entire season of full-length episodes of "Desperate Housewives" but not the latest presidential debate held in New Hampshire?

I guarantee you this hurts the ABC brand. What were they thinking? Is this a deliberate "mainstream corporate media" black-out strategy or is this just plain incompetence? Probably both.

ABC News does a great disservice to the American people. Do they think anyone is going to trust Charles Gibson now?

What a joke.

Luckily there are alternatives >>

Score another "win" for YouTube.

Total Voter Turnout
356,000

Percentage of total vote
24.5% Obama (D)
20.5% Edwards (D)
19.8% Clinton (D)
11.4% Huckabee (R)

America turns the page. Is this Politics 2.0?

The McKinsey nerds have been doing their homework. In particular they seem to be paying attention to the ideas of McKinsey alumnus John Hagel who foretold almost every single one of these "trends" a decade ago.

In Eight business technology trends to watch they tell us that "Technology alone is rarely the key to unlocking economic value: companies create real wealth when they combine technology with new ways of doing business."

Here are the eight technology-enabled business trends they've identified:

1. Distributing cocreation
"Technology now allows companies to delegate substantial control to outsiders—cocreation—in essence by outsourcing innovation to business partners that work together in networks."

2. Using consumers as innovators
"As the Internet has evolved—an evolution prompted in part by new Web 2.0 technologies—it has become a more widespread platform for interaction, communication, and activism. Consumers increasingly want to engage online with one another and with organizations of all kinds. Companies can tap this new mood of customer engagement for their economic benefit."

3. Tapping into a world of talent
"Top talent for a range of activities—from finance to marketing and IT to operations—can be found anywhere. The best person for a task may be a free agent in India or an employee of a small company in Italy rather than someone who works for a global business services provider. Software and Internet technologies are making it easier and less costly for companies to integrate and manage the work of an expanding number of outsiders, and this development opens up many contracting options for managers of corporate functions."

4. Extracting more value from interactions
"The application of technology has reduced differences among the productivity of transformational and transactional employees, but huge inconsistencies persist in the productivity of high-value tacit ones. Improving it is more about increasing their effectiveness—for instance, by focusing them on interactions that create value and ensuring that they have the right information and context—than about efficiency. Technology tools that promote tacit interactions, such as wikis, virtual team environments, and videoconferencing, may become no less ubiquitous than computers are now. As companies learn to use these tools, they will develop managerial innovations—smarter and faster ways for individuals and teams to create value through interactions—that will be difficult for their rivals to replicate. Companies in sectors such as health care and banking are already moving down this road."

5. Expanding the frontiers of automation
"Companies, governments, and other organizations have put in place systems to automate tasks and processes: forecasting and supply chain technologies; systems for enterprise resource planning, customer relationship management, and HR; product and customer databases; and Web sites. Now these systems are becoming interconnected through common standards for exchanging data and representing business processes in bits and bytes. What’s more, this information can be combined in new ways to automate an increasing array of broader activities, from inventory management to customer service."

6. Unbundling production from delivery
"Technology helps companies to utilize fixed assets more efficiently by disaggregating monolithic systems into reusable components, measuring and metering the use of each, and billing for that use in ever-smaller increments cost effectively. Information and communications technologies handle the tracking and metering critical to the new models and make it possible to have effective allocation and capacity-planning systems."

7. Putting more science into management
"Just as the Internet and productivity tools extend the reach of and provide leverage to desk-based workers, technology is helping managers exploit ever-greater amounts of data to make smarter decisions and develop the insights that create competitive advantages and new business models. From “ideagoras” (eBay-like marketplaces for ideas) to predictive markets to performance-management approaches, ubiquitous standards-based technologies promote aggregation, processing, and decision making based on the use of growing pools of rich data."

BTW, this "trend" is owned by one Tom Davenport.

8. Making businesses from information
"Accumulated pools of data captured in a number of systems within large organizations or pulled together from many points of origin on the Web are the raw material for new information-based business opportunities."

Take for example, ecosystema >>

So what have they left out? What business-tech trends have they overlooked?

Here are a few I came up with:

a. Internal Branding
The use of technology to improve internal communications and encourage employee engagement. Read up on Tammy Erickson!

b. The Return of Online Communities
An old idea, but with Web 2.0, companies must learn to engage their partners, suppliers, customers, and yes their competition. This does overlap trend # 4 (extracting value from interactions) but it's far more than that. More about this from John Hagel >>

c. Greenwashing
Every business, even in the technology world, must learn how to become sustainable in this age of environmental activism. Companies that do so half-heartedly will pay the price.

d. Authentic Marketing
Using technology to drive a company's message to capture attention using techniques that are authentic and reflect the core values of the company. The key to this will be ecosystem management.

What else?

About this Archive

This page is an archive of entries from January 2008 listed from newest to oldest.

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