lead/marke | ralf schwartz

[L/M NET] Tim Kastelle "Answer Four Questions to Improve Innovation"

(L/M NET: the blogged experience & expertise of some of the best minds in Innovation, Brand Engagement, Communication Agility:
Tom - Tim - Konstantin - Helge - Drew - Charles - Anthony - Adrian)

 

There are obstacle to innovation everywhere. Risk aversion, lack of resources, lack of enthusiasm, not enough time, not enough ideas, too many ideas – the list is potentially endless.

You can help your organisation be more innovative right now (today!) by answering these four questions:

1. What is one idea that I can execute right now to make things work better? We often mistake generating ideas for innovating. But to innovate, you have to execute new ideas that create value. One way to create value is to improve your processes. I’ll be you have plenty of ideas about how you could make things work better. So execute one of them right now.

   Then do the same thing tomorrow.

   By getting into the habit of executing ideas you can get over one of the biggest innovation obstacles. Not all of them work, but the net value of a great idea is zero. It’s only be testing them out that you find the value in your ideas.

2. What would I do differently if everyone reporting to me was a volunteer? When you answer this question, you start identifying obstacles for your team. And you shift from a directive approach to a supporting one. This usually leads to better innovation.

   Identifying these obstacles might give you some really good ideas for your answer to question number 1 too.

3. If we were starting our business right now, would we do it this way? If you were starting a brand-new newspaper right now, would you invest millions of dollars into an editorial system that prevents you from easily sharing stories between print and digital outlets?

   Probably not.

   And yet, most big newspapers have systems that do exactly that.

   The problem is, their new competitors don’t have these. The new news organisations and those of the future won’t have to deal with this obstacle.

   Answering this question will help you identify the structural and processual obstacles that your firm faces. And it will give you some ideas about potential business model innovations.

4. Who can I connect with to generate some interesting new ideas? Most great ideas come from the intersection between two different bodies of knowledge. You may know your field extremely well. So who can you connect with that has a completely different body of knowledge?

   Think of someone, and connect up. Send them an email, or a tweet. Invite them for a coffee.

   One way or another, make a new connection.

Innovation requires the execution of ideas. By answering these questions, you generate new ideas. By acting on these new ideas, you can get into the habit of innovating.

It may be that none of these questions trigger huge game-changing innovations.

But then, you won’t know that until you test them out, will you?

 

(ralf says: Good questions! To illustrate the first one a little bit more, I linked a post I wrote in Jan, 2011: Doing Things Right for the First Time.)

Tim is a lecturer at The University of Queensland Business School. He researches, writes, teaches and consults on topics relating to effective innovation management, with an emphasis on studying innovation networks. He blogs at The Innovation Leadership Network. Twitter: @timkastelle

[L/M NET] Tim Kastelle > "The Best Social Media Strategy of All Time!"

(L/M NET: the blogged experience & expertise of some of the best minds in Innovation, Brand Engagement, Communication Agility:
Tom - Tim - Konstantin - Helge - Drew - Charles - Anthony - Adrian)

 

I constantly run across blog posts, emails, and spam comments on the blog that promise to tell you the perfect strategy for getting a higher PageRank for your website, or more twitter followers, or a higher Klout score.

And the problem with all of these strategies is that they are faulty. They might results in a higher PageRank, or more twitter followers, or a higher Klout score, but they don’t have any effect at all on what really matters: impact.

And the fact that these “strategies” don’t change your impact is a big problem.

But unlike all of these scam artists, I actually do have the best social media strategy of all time. And because I’m a nice guy, I’m doing to give it to you for free.

Ready?

Here it is:

Do awesome work.

If you do awesome work, it doesn’t matter what keywords you use in the meta tags. People will respond to it.

If you do awesome work, it doesn’t matter what time you tweet about it. People will find it.

Here are the principles of the Do Awesome Work strategy:

• There are no shortcuts. There. Are. No. Shortcuts. If you get twitter followers by following a bunch of random people so that they’ll follow you back, it doesn’t help you spread your ideas, because they don’t care about your ideas. I can’t say this enough – there are no shortcuts.
• You have to do the work. Don’t follow your dreams, follow your effort. All genuine social media success is built on actually putting in the hard work.
• Social media success without awesome work is a pyrrhic victory. Let’s say you do manage to get thousands of twitter followers and a high PageRank, and tons of people go to your site, only to find that the content sucks. Then what? Have you actually gained anything? No.

  You are much better off with a modest number of followers and so-so search results, but with great content. Because then people will engage with it, and you will have impact – and that’s what really matters.

Why can I give this idea away for free? Because the simple fact of the matter is that most people aren’t willing to put in the effort – they want the shortcut.

And that doesn’t do any of us any good.

I want you to do awesome work. Because then I can read it, and be inspired. And I can think about it, and build on it. And if we’re lucky, maybe we can do some awesome work together

So please, follow the best social media strategy of all time:

Do awesome work.

(ralf says:
Do Start Today!)
 

Tim is a lecturer at The University of Queensland Business School. He researches, writes, teaches and consults on topics relating to effective innovation management, with an emphasis on studying innovation networks. He blogs at The Innovation Leadership Network. Twitter: @timkastelle

[L/M NET] Tim Kastelle: "Your Customer Isn’t 'Everyone' - Seven Innovation Thoughts Triggered by Peter Drucker"

(L/M NET: the blogged experience & expertise of some of the best minds in Innovation, Brand Engagement, Communication Agility:
Tom - Tim - Konstantin - Helge - Drew - Charles - Anthony - Adrian)

Of all the management writers I’ve read, Peter Drucker probably generates more interesting quotes per page than anyone. Tom Peters and Joseph Schumpeter come close too. Here are six thoughts triggered by reading his book Management Challenges for the 21st Century:

1. "And yet very few institutions know anything about the noncustomers—very few of them even know that they exist, let alone know who they are. And even fewer know why they are not customers. Yet it is with the noncustomers that changes always start."

   Drucker is making a slightly different point here – that we need to look outside of our normal networks to innovate. True. But also, your customer isn’t “everyone.” Even Coke has more noncustomers than customers in the world. A big part of strategy is making the choice of who your customer will be. This choice is based on value, however:

2. "The starting point has to be what customers consider value. The starting point has to be the assumption—an assumption amply proven by all our experience—that the customer never buys what the supplier sells. What is value to the customer is always something quite different from what is value or quality to the supplier. This applies as much to a business as to a university or to a hospital."

   Innovators often don’t know what their idea is for. This is a strong argument for two things: empathy and experiments.

3. "Everything improved or new needs therefore first to be tested on a small scale, that is, it needs to be PILOTED. The way to do this is to find somebody within the enterprise who really wants the new. As said before, everything new gets into trouble. And then it needs a champion. It needs somebody who says: “I am going to make this succeed,” and who then goes to work on it. And this person needs to be somebody whom the organization respects. This need not even be somebody within the organization. A good way to pilot a new product or new service is often to find a customer who really wants the new, and who is willing to work with the producer on making truly successful the new product or the new service."

   New ideas need champions. This is a critical part of piloting or prototyping, which in turn drives experimentation. This is one of the best ways to find out what customers actually value – testing.

4. "Every organization operates on a Theory of the Business, that is, a set of assumptions as to what its business is, what its objectives are, how it defines results, who its customers are, what the customers value and pay for. Strategy converts this Theory of the Business into performance."

   Theories of Business need to be tested – this is how to design the experiments. Start with the assumptions in your business model, then test them to see if they are true.

5. "An entrepreneur who does not learn how to manage will not last long. A management that does not learn to innovate will not last long. In fact, … business—and every other organization today—has to be designed for change as the norm and to create change rather than react to it.

   The main reason is that a policy of systematic innovation produces the mindset for an organization to be a change leader. It makes the entire organization see change as an opportunity."

   The consequence of this is that innovation is a process, which can be managed.

6. "The first change policy, therefore, throughout the entire institution, has to be Organized Abandonment. The change leader puts every product, every service, every process, every market, every distribution channel, every customer and end-use, on trial for its life. And it does so on a regular schedule. The question has to be asked—and asked seriously—“If we did not do this already, would we, knowing what we now know, go into it?” If the answer is “no,” the reaction must not be “Let’s make another study.” The reaction must be “What do we do now?” The enterprise is committed to change. It is committed to action."

   If we were starting today, would we do this? This is the blank slate approach described by Jeffrey Phillips, and it is an important tool for evaluating your business model.

7. "To try to make the future is highly risky. It is less risky, however, than not to try to make it. A goodly proportion of those attempting to do what this chapter discusses will surely not succeed. But, predictably, no one else will."

   Or, as Wayne Gretzky said, “You miss 100% of the shots you don’t take.” You improve your chances of succeeding by systematically looking at the drivers of innovation opportunities.

Here it is in a nutshell: Innovation drives change, and change drives growth. We can’t know in advance what will work, so we need to use experiments to discover what customers value. It’s risky, but less risky than doing nothing.

(ralf says:
How to comment on this? With just another quote!

8. “People who don't take risks generally make about two big mistakes a year. People who do take risks generally make about two big mistakes a year.” - Peter F. Drucker)

Tim is a lecturer at The University of Queensland Business School. He researches, writes, teaches and consults on topics relating to effective innovation management, with an emphasis on studying innovation networks. He blogs at The Innovation Leadership Network. Twitter: @timkastelle

[L/M NET] Tim Kastelle > "Don’t Be First to Market, Be First to Scale"

(L/M NET: the blogged experience & expertise of some of the best minds in Innovation, Brand Engagement, Communication Agility:
Tom - Tim - Konstantin - Helge - Drew - Charles - Anthony - Adrian)

Often when people have an idea for a great new product or service, they rush to be first to market with it. We keep hearing about first-mover advantage and how you need it.

The only problem with first-move advantage is that it doesn’t seem to exist. The academic research on the topic shows that there is no such thing.

[L/M NET] Tim Kastelle > "Eight Business Models, and Why They’re Important"

(L/M NET: the blogged experience & expertise of some of the best minds in Innovation, Brand Engagement, Communication Agility:
Tom - Tim - Konstantin - Helge - Drew - Charles - Anthony - Adrian)

 

The term Business Model is one that gets thrown around a lot these days. Even though it might sound like a buzzword to you, it’s important to understand what a business model is, and how they are useful.

One of the confusing things about the business model concept is that there are a wide variety of models of business models, and it seems as though everyone that talks about them makes up a new one. This can be frustrating if you are trying to figure out how to use the concept.

At their core, all business models address this questions: how do we sustainably deliver value to our customers? In this instance, the sustainable part refers to your organisation – how can you deliver value so that you’re still around in the future?

[L/M NET] Tim Kastelle > You Have a Choice - Act!

(L/M NET: the blogged experience & expertise of some of the best minds in Innovation, Brand Engagement, Communication Agility:
Tom - Tim - Konstantin - Helge - Drew - Charles - Anthony - Adrian)

 

There are plenty of excuses for not innovating – for not taking steps to change things. However, if you see a way to make things better and you don’t do anything, then you’re letting your situation control you. If you’re dissatisfied with the situation, you have to change the way you act.

Here is the way that Tom Peters puts it in a post from Innovation Excellence:

I believe there is one and only one source of innovation – pissed off people.

[L/M NET] Tim Kastelle > Make Your Own Map to Make Novel Connections

(L/M NET: the blogged experience & expertise of some of the best minds in Innovation, Brand Engagement, Communication Agility:

Tom - Tim - Konstantin - Helge - Drew - Charles - Anthony - Adrian)

 

Connecting ideas is the fundamental creative act in innovation.
If this is the case, how do we get better at it?

I was being interviewed in my office by a student yesterday for a project that she’s doing. As we talked, she kept looking at my bookshelves, with an increasingly confused look on her face. Finally, she said “this is off-topic, but what exactly do you study?” She had stumbled across one of my strategies for connecting ideas creatively – reading very widely.

Here is how I approached this issue in an earlier post:

A while back my PhD student Sam and I were talking, and he asked me about my RSS feed. His question was something along the lines of ‘what blogs would I have to read if I wanted to be able to make the connections that you do on your blog?’ As we talked, I realised that it didn’t matter if I gave anyone else my exact RSS feed, they wouldn’t be able to replicate my blog.

The reason for this is that the articles in my RSS feed that trigger ideas are completely dependent upon my unique set of experiences, including all of the things that I’ve read and done previously. It reminds me of the idea of psycheography that was developed by Guy Debord and The Situationists (it should be noted that they would be horrified at the use of these ideas in a context that has anything to do with business, but I guess this is part of building novel connections between ideas!).

Consider this map of Paris:

It shows the sections of the city used by a student over a period of several weeks. There are two important points to think about this with this. First, each person’s map of the city they live in will be unique. My version of Brisbane will by fundamentally different from that of everyone else that lives here. The same is true for all cities. Second, most people use only a very small percentage of the city in which they live. The student’s version of Paris is actually quite a small amount of the overall city.

The Situationists’ response to this was the dérive:

One of the basic situationist practices is the dérive [literally: “drifting”], a technique of rapid passage through varied ambiances. Dérives involve playful-constructive behavior and awareness of psychogeographical effects, and are thus quite different from the classic notions of journey or stroll.

In a dérive one or more persons during a certain period drop their relations, their work and leisure activities, and all their other usual motives for movement and action, and let themselves be drawn by the attractions of the terrain and the encounters they find there. Chance is a less important factor in this activity than one might think: from a dérive point of view cities have psychogeographical contours, with constant currents, fixed points and vortexes that strongly discourage entry into or exit from certain zones.

This might seem a bit abstract, but there are some important implications here for innovation, including:

1. Identify the paths you normally take through information: the world of information is even bigger than a city. Each of us takes a unique path through this every day. What is yours? What are the limits that this path imposes on the ideas that you have and the connections you make?
2. Introduce some new paths through this information: the dérive was a method for finding a way out of the normal paths one takes through a city. How can we do the same with information? Twitter can work as a serendipity engine, but to achieve this, you need to consciously connect and pay attention to people that have backgrounds and interests that are quite different from yours. And again, there is great value in reading widely.
3. Make your own map: I’ve been telling my MBA students that their assessments should reflect their own map through the materials that we’re working on together – each person’s will be unique because they are applying the ideas in a unique situation. In other words, they have to make their own map through the material. So do you.

All of this is probably just a way to rephrase what John was saying when he was telling us to Be a Hedgefox!

The bottom line is this – to increase the quality of our innovative ideas, we have to figure out a way to make novel creative connections between ideas. To do this, we have to find a way to access ideas outside of our normal patterns of thinking. We have to make our own map.

(ralf says:
The benefits of having an own map is even harder to explain to people during these days of navigational systems and nanny states around the world.
Yes, think about that!

The benefits of having an own map lie at the intersection of having a distinctive vision and being lost in an uncertain world while at the same time knowing how to handle a map, a plan, a compass!

Your own map gives you a feeling of mastering the landscape, the nature, culture, and future of your whereabouts and whatabouts.

Not being forced to a navigational system (ie. processes, structures, regulations, limitations) gives you individuality and independence, gives you serendipity!

Enjoy that!)

Tim is a lecturer at The University of Queensland Business School. He researches, writes, teaches and consults on topics relating to effective innovation management, with an emphasis on studying innovation networks. He blogs at The Innovation Leadership Network. Twitter: @timkastelle

[L/M NET] Tim Kastelle > "Innovation Obstacle: Bureaucracy?"

(L/M NET: the blogged experience & expertise of some of the best minds in Innovation, Brand Engagement, Communication Agility:

Tom - Tim - Konstantin - Helge - Drew - Charles - Anthony - Adrian)

 

What is the innovation that led to civilization?

There are some interesting answers to this question in Why the West Rules, For Now by Ian Morris. As part of his research, Morris has developed a Social Development Index, which he uses to track the progress of civilizations from 14000 BC to present. The index tracks improvements in areas such as energy capture (both as food and as fuel), organizational capability, technology development, and information sharing capacity.

Here is what the graph shows (taken from this .pdf that summarizes the research):

The first big jump happened between 2000 and 1000 BC, indicated by the very crude arrow that I’ve added. What was the innovation that caused that jump?

The invention of Bureaucracy.

Morris (and many other historians) argue that it was the invention of bureaucracy that actually triggered the development of agriculture, written communication, and other tools that are necessary for people to undertake complex tasks.

Bureaucracy is one of the most important innovations in human history – without it, we’d still be in caves. So why does it get such a bad rap whenever we talk about innovation? It’s nearly impossible to discuss innovation within organisations without hearing complaints about bureaucracy and bureaucrats.

The problem isn’t actually with bureaucracy. Bureaucracy makes systems, supports the development of routines, and gives us some constraints – which are actually essential to innovation (see here and here for examples). We need all of these things to innovate.

The problem with bureaucracy is when we follow rules simply for the sake of following rules. This is another form of path dependence, which leads to lock-in on sub-optimal systems. The problem is with bureaucratic systems that don’t support strategy – these stifle innovation.

Bureaucracy is actually a neutral term, like aerodynamics. To call a car “aerodynamically designed” is a nonsense – all cars have aerodynamics. It’s just that Teslas and Porsches have excellent aerodynamics, while minivans and SUVs have terrible aerodynamics.

In the same way we can have excellent bureaucracy, which supports innovation, and terrible bureaucracy, which obstructs innovation.

Bureaucracy isn’t actually an innovation obstacle, but bad bureaucracy is.

(ralf says:
And now we would need a word for 'good bureaucracy'.
A bureaucracy fostering innovation, speed, acceleration of processes, supporting the individual, empowering curiosity, beginner's mind, outliers! ...)

Tim is a lecturer at The University of Queensland Business School. He researches, writes, teaches and consults on topics relating to effective innovation management, with an emphasis on studying innovation networks. He blogs at The Innovation Leadership Network. Twitter: @timkastelle

Innovation Quotes: Is Tom Peters the Reborn Leonardo da Vinci? ;)

My friend Tim (a member of lead/marke NET) postet To Great Innovation Quotes at his Australian blog, stating:

"... quote is from my favourite management guru – Tom Peters, from an article in the Chicago Tribune:

Life is pretty simple: You do some stuff. Most fails. Some works. You do more of what works. If it works big, others quickly copy it. Then you do something else. The trick is in the doing something else. ..."

Hm, I thought, Tom said that? I remembered that quote being from Leonardo da Vinci ('cause I posted it here: Leonardo da Vinci on Innovation).

How should Tom know that the internet does not forget - back in 1994, when he wrote: The Best Corporate Strategy? None, Of Course, and forgot to mention Leonardo?

Or didn't he?

Because if you follow my posts links straight to that one you get, annotated right below the above quote:

"Tom Peters, American writer on business management, The Best Corporate Strategy? None, Of Course, Chicago Tribune, July 11, 1994 (quote often misattributed to Leonardo da Vinci)".

Ain't that just great!? I do love that!

And even Google won't help you on that one, so decide for yourself.

It really does not matter who said it. It really is a great quote. Thanks, Tim, for that. 

[L/M NET] Tim Kastelle > "Why (Almost) Everything is Lousy"

(L/M NET: the blogged experience & expertise of some of the best minds in Innovation, Brand Engagement, Communication Agility:

Tom - Tim - Konstantin - Helge - Drew - Charles - Anthony - Adrian)

I recently read an article on BNet by Geoffrey James called “Top 5 Totally Useless Business Experts“. James usually writes an interesting column, and even in this one he makes some good points. But he also uses a form of argument that is deeply flawed.

Here is part of the post:

Useless Expert #1: Management Consultant

[L/M NET] Tim Kastelle > "Anything You Want" - "Experiment. Go!"

(L/M NET: the blogged experience & expertise of some of the best minds in Innovation, Brand Engagement, Communication Agility:
Tom - Tim - Konstantin - Helge - Drew - Charles - Anthony - Adrian)

 

Experimenting is the key to innovation success.

The new book Anything You Want by Derek Sivers is worth a read (there’s tons of information about the book, and some great videos here). The book tells lessons that Sivers learned while running his website CDBaby. My first thought in reading the experiences of one person is “your mileage my vary” – but Sivers makes some excellent points that do generalise, including a couple about experimenting.

One is that whatever business model you have is simply one option of many possible ones.

He tells the story of the voice coach that he had when he was singing in a band. He’d have Sivers sing a song an octave higher, then an octave lower, then fast, slow, like Tom Waits, etc. After doing all of that there was always a choice about the best way to sing each song.

It’s the same for business models. Here is how Sivers puts it:

I’m taking an entrepreneurship class now. I’ve never studied business before.

We analyzed a business plan for a mail-order pantyhose company. Like all business plans, it proposed only one plan.

After reading the whole thing, I felt like saying things my old voice teacher would have said:

• “OK, make a plan that requires only $1000. Go!”
• “Now make a plan for ten times as many customers. Go!”
• “Now do it without a website. Go!”
• “Now make all your initial assumptions wrong, and have it work anyway. Go!”
• “Now show how you would franchise it. Go!”

You can’t pretend there’s only way to do it. Your first idea is just one of many options. No business goes as planned, so make ten radically different plans.

This is good advice for business plans, and it’s good advice for implementing any new idea.

The more ways you work out how an idea might be executed, the more likely it is that you’ll stumble upon a good plan once your idea hits reality.

Remember – every part of a business model is actually a hypothesis. You should figure out how to test each part.

Here’s another bit from the book:

If it's not a hit, switch from Derek Sivers on Vimeo.

 

Watch the whole thing, but here’s the key quote:

We’ve all heard about the importance of persistence, but I had misunderstood.

Success comes from persistently improving and inventing, not from persistently doing what’s not working.

We all have lots of ideas, creations and projects. When you present one to the world, and it’s not a hit, don’t keep pushing it as is. Instead, get back to improving and inventing.

Innovation is about experimenting. This story from Sivers is a story about experimenting – keep trying things to improve them. You show persistence with the experiments, not just by sticking with an idea that’s not working.

“Experiment. Go!”

(ralf says:
I just want you to have a look at that picture/quote.
Keep adjusting, Adjusting is not a weakness, it is a virtue!)

Tim is a lecturer at The University of Queensland Business School. He researches, writes, teaches and consults on topics relating to effective innovation management, with an emphasis on studying innovation networks. He blogs at The Innovation Leadership Network. Twitter: @timkastelle

[L/M NET] Tim Kastelle > Our Job is to Invent the Future, revisited

(L/M NET: the blogged experience & expertise of some of the best minds in Innovation, Brand Engagement, Communication Agility:
Tom - Tim - Konstantin - Helge - Drew - Charles - Anthony - Adrian)

 

If we’re trying to innovate, our job is to invent the future. That’s why I was struck by this quote from Ray Kurzweil from a few years ago:

I’m an inventor, and I started looking at long-term trends because an invention has to make sense in the world in which it was finished, not the world in which it started.

This short quote hits on several important points:

• We have to be thinking about the future because innovation always takes much longer than we expect it to: innovation is a three part process – idea generation, idea selection and execution, and idea diffusion. In particular, idea execution can often take a (very!) long time, as can idea diffusion.
• Innovation requires vision: the first part of the process, idea generation, requires vision. While there is often an overemphasis on ideation, innovation does always start with a great idea.

  

• We need a methodology for thinking about the future: one way or another, we need to think about where the world is heading. There are many ways to do this. We can make sure that in addition to tending to our core business, we also spend some time finding out what is going on out on the edges. We can use collaborative methods, as outlined in The Open Foresighting project (that link is to Venessa Miemis’ blog – go there and scroll down to the Futures Thinking links in the right column for more great resources in this area). We can use scenario planning – here is a recent version discussed on The Long Now Blog, another good resource. We can extrapolate based on what’s going on today.

In reality, we probably need to undertake a combination of all of these techniques. And just as importantly, we have to combine thinking about the future with a culture of experimentation. It’s experimenting that ensures that we are finding ideas that will actually work.

Our job is to invent the future, and to do that, first we have to formulate a good idea of what the future should be.

(ralf says:
It often also makes sense to look at 3 groups of people: 01 kids, and what they love to do - 02 most admired companies - like Apple, Google, Twitter - of the world, and where they are heading - 03 politicians, and what they are prohibiting. This will give you a multi-dimensional picture of the future.

You just have to be better than that.)

Tim is a lecturer at The University of Queensland Business School. He researches, writes, teaches and consults on topics relating to effective innovation management, with an emphasis on studying innovation networks. He blogs at The Innovation Leadership Network. Twitter: @timkastelle

[L/M NET] Tim Kastelle > What’s Your Skype?

(L/M NET: the blogged experience & expertise of some of the best minds in Innovation, Brand Engagement, Communication Agility:
Tom - Tim - Konstantin - Helge - Drew - Charles - Anthony - Adrian)

 

In his latest book Macrowikinomics, Don Tapscott (along with Anthony Williams) argues that there are two types of business models in existence today: those that have been disrupted by the internet, and those that are waiting to be disrupted by the internet (summarised in an article from the Wall Street Journal).

I’m not 100% convinced that this is true, but I think that there is great value in acting as though it is.

Here’s an example – take a look at this graph (from TeleGeography):

It shows the annual growth in minutes of international phone calls made over regular phone lines, versus those made on Skype.

Skype was founded in 2003, and almost instantly it was heralded as the death of long distance. It hasn’t been yet (although it has been in my household). However, the graph shows that it took close to eight years for Skype to really start biting into the market share of the traditional telcos.

Like I’ve said before, it takes a lot longer for a new idea to spread than we expect. What happens while this delayed diffusion takes place?

First, there are a lot of inflated claims made about the impact of the new idea. Then it takes longer to diffuse than expected, and everyone that should be worried about it is able to decide that it isn’t a threat after all. Eventually, the new idea either dies out (think Friendfeed), or takes off (think Skype) – but usually much later than expected. When these new ideas do take off, they often seem to take by surprise those operating business models that are disrupted by these ideas.

That’s why I think that it is very important for you to think about your business model, and ask: What’s my Skype?

Thinking about this question now will give you a few advantages:

• Planning for disruption means it won’t take you by surprise when it arrives: by giving some thought to what might disrupt your current business model, it gives you some time to react to these threats.
• Even if you don’t pick the exact idea that disrupts your business model, it’s good practice to think about what could do so: you might not be able to pick the exact idea that will disrupt your current business model. However, giving some thought to what could will help you be flexible in planning for change, and for thinking about scenarios that will help you cope with this change.
• Building this flexible thinking will help you maintain a balanced innovation portfolio: to be successful over the long term, you need to divide your innovation efforts across both ideas that will make you better at what you’re currently doing, and ideas that will disrupt whatever you’re currently doing. You don’t need to invest equal amounts into both types of innovation, but you need to be thinking about both.

Your Skype may not be out there yet. If not, great – you can work on inventing it yourself. If so, thinking about it now, and thinking about how you can respond to the changes it will instigate can be extremely valuable.

 

(ralf says:
If you do not 'believe', what Tim is telling us, please read this more personal story about Skype and Microsoft's Steve Ballmer: Dear Bill, Let Steve Ballmer Pay Skype's $8.5 billion from his Private Assets!

Now rethink the above ;)

Tim is a lecturer at The University of Queensland Business School. He researches, writes, teaches and consults on topics relating to effective innovation management, with an emphasis on studying innovation networks. He blogs at The Innovation Leadership Network. Twitter: @timkastelle

[L/M NET] Tim Kastelle > There Are No Innovation Shortcuts

(L/M NET: the blogged experience & expertise of some of the best minds in Innovation, Brand Engagement, Communication Agility:
Tom - Tim - Konstantin - Helge - Drew - Charles - Anthony - Adrian)

 

Three things that caught my eye yesterday:

1. An excellent post by Helen Walters, which included this section:
   

   “The innovation shortcut is yours for the taking.”
   —
   This quote, from Gabor George Burt’s piece Why the Best Innovations Are About Relevance, Not Invention is the kind of statement to make blood run cold. Promising the earth and underplaying the difficult, time-consuming reality of innovation work is more than unhelpful. There’s no such thing as an “innovation shortcut” and promising one is unrealistic.

   Walters then addresses some of the good points that Burt makes, but her main issue here is correct - there are no shortcuts to innovation.

2. In the daily barrage of spam comments, there are always ones linking to sites with titles like “Buy Facebook Likes” and many about Search Engine Optimization. These, again, are shortcuts, and they work as well as any other shortcut. In other words, they don’t work at all.
3. Mindy McAdams wrote an interesting post called Branding: Should journalists build a personal brand? which includes her response to a quote from Gene Weingarten in the Washington Post:
   

   “Now, the first goal seems to be self-promotion — the fame part, the “brand.” That’s because we know that, in this frenetic fight for eyeballs at all costs, the attribute that is most rewarded is screeching ubiquity, not talent.”

   It’s very important that new or would-be journalists take Weingarten’s point to heart. There won’t be anything to be branded unless you have some substance to market, and that means much more than a talent for writing glibly. Lots of people have such a talent. Many of them spend their lives writing for an audience of one.

   “The work” is just that - work - and as part of the work, you have to get off Facebook and go outside and speak to real live people. You have to read, widely and voraciously. You have to be curious about those who live in skins other than your own. You have to learn what makes a good story and how to tell a good story well.

Walters and McAdams both make the point that at the bottom, success is built on working hard, creating substance, and meeting the needs of people. This is what you have to do to innovate.

You can’t find an innovation shortcut by discovering a new source of great ideas. You have to do the work to figure out how to make the idea real, and to find a way to get the idea to spread.

Search engine optimization doesn’t do you any good if the search engines don’t point to something of substance - you have to do the work of creating something worth searching for.

You can’t create a personal brand out of nothing. You have to do the work to make something before promoting it does any good.

It’s not about your great ideas. Innovation is about executing your great ideas to create value.

You have to do the work first.

(ralf says:
Even worse, for some 'innovators': an innovation not working in the market, not selling, not being adopted by the people, not successful, is no innovation at all!

And: an innovation NOT disrupting the market is no innovation at all!

You may tell that to all your ingenious engineers, your marketing stars, your social media consultants...)

Tim is a lecturer at The University of Queensland Business School. He researches, writes, teaches and consults on topics relating to effective innovation management, with an emphasis on studying innovation networks. He blogs at The Innovation Leadership Network. Twitter: @timkastelle

[L/M NET] Tim Kastelle > "Kaiser Chiefs and New Business Models for Music"

(L/M NET: the blogged experience & expertise of some of the best minds in Innovation, Brand Engagement, Communication Agility:
Tom - Tim - Konstantin - Helge - Drew - Charles - Anthony - Adrian)

 

I just finished listening to my version of the new album by Kaiser Chiefs, The Future is Medieval, and I have to say that I’m pretty happy with it.

You may well ask what makes it my version?

The thing that makes it mine is that I picked the 10 songs to go on it, I picked the order they’d go in, and I made the artwork. And I guess I’m promoting it now too, even though what I’m really interested in is the business model.

Here is how Mike Masnick describes the idea:

…there are two key things that the band is doing with this digital (and it’s only digital) release:

• Let fans create a “custom” album with custom artwork. The band is effectively releasing 20 songs, and users get to pick which 10 they want, and put them in any order they want — and then they get a custom piece of album artwork, based on the choices. The website is fun to play around with as well.
• Then, once you’ve bought the album, you also get a “fan page” for the unique album that you created, and if you drive others to that page and they buy the copy of the album that you created, you get £1 (the full album costs £7.50).

There are some other little features as well, but those are the two big ones. It’s definitely an interesting idea, and I’ll be curious to see how it goes.

I’m pretty curious to see how it will work too. Masnick has some reservations about the choices that they’ve made – but it illustrates an important point. When you face a turbulent environment, as record labels certainly do at the moment, then you have to experiment with new business models to find out what works.

This is an interesting experiment.

Here is what singer Ricky Wilson had to say about it in an email to The Lefsetz Letter:

We’re quite excited about this. Why not make an album yourself? We wanted to reward the fans for being our fans and thought this could be nice.

We just sold all our tickets for our first two gigs exclusively on our facebook page, which worked a treat and we’re going to be getting fans to use Facebook polls to help us pick set-lists and stuff. God knows if it’ll work.

We’ve used a load of our own money to hire some really clever people to build the site and market it so we’re hopeful.

This definitely isn’t some sort of two-fingers-to-the-system thing. In fact our label Fiction have been very supportive.

It’s not supposed to be a massive statement to the world or a fight against anything. It was just fun and we needed that to be honest.

So what’s different from a business model standpoint? A few things.

By getting people involved it changes the value proposition pretty significantly. If you take an hour to put together your own version of the CD, then you’re likely to feel pretty invested in it. In my case, that worked pretty well because even though I love and have bought a couple of Kaiser Chiefs songs, this is the first full CD of theirs that I’ve ever gotten. Marion Gibbon has a good analysis of some of the issues here as well.

The value network is different too, with fans promoting the record (although here is a critique from Dan Catt of that part of the scheme who suggests that this isn’t necessarily the best idea in the whole experiment – something that I agree with).

It’s also interesting to see what hasn’t changed – the value chain that produced the record is pretty standard. The band was supported by their label to go into the studio to make the music, and all the rest of the process right up to distribution is pretty standard. So it’s not a full DIY value chain like Kristin Hersh is using.

I’ve got no idea if this will work or not. But in a sense it doesn’t matter, because once it’s done, we’ll know something about this type of approach. And other bands and labels can try it themselves, or come up with a way to make this business model better.

The one thing that I do know is that if your business model is in trouble, trying out ideas that involve your customers more deeply in the process of creating things is probably smarter than suing them.

That was the end of the regular post, but here is where I’ll tell you a bit more about my version of the album. Carl Wilkinson has a good discussion of the ideas behind the album, whether or not it is a good idea for artists to give up control over track sequences, and the story behind his version of the album in this story at the Financial Times. Strangely, his first three tracks are identical to mine, even though I’m pretty sure we used a different method for picking songs.

In looking at this and a few other posts about the records, I think I messed up the artwork on mine. In any case, if you’d like to see the artwork, or check out my song choices, you can go here:

I’m pretty sure that the overlap between people reading this blog and Kaiser Chief fans is pretty small:

If you’re interested in hearing some of the music from the record, this is the first single Little Shocks:

 

If all this grabs your interest, you should check out the new record. But whatever you do, don’t buy my version – make your own!

(ralf says:
"When you face a turbulent environment, as record labels certainly do at the moment, then you have to experiment with new business models to find out what works", Tim writes above.

I have to add, just to make that shure: If you do think these times are not turbulent, and you are not overwhelmed by that, you are not moving fast enough! Now you have a problem! You do not seem to understand what people's new individuality, independence, and impatience really do imply for brands, businesses, and their success (where I might repeat myself).

The music industry, like car, publishing and energy industries are the best examples for coming late and never beginning to realize that ...)

Tim is a lecturer at The University of Queensland Business School. He researches, writes, teaches and consults on topics relating to effective innovation management, with an emphasis on studying innovation networks. He blogs at The Innovation Leadership Network. Twitter: @timkastelle

[L/M NET] Tim Kastelle > "Are You Climbing Hills or Crossing Valleys?"

(L/M NET: the blogged experience & expertise of some of the best minds in Innovation, Brand Engagement, Communication Agility:
Tom - Tim - Konstantin - Helge - Drew - Charles - Anthony - Adrian)

One of the key issues we face in managing organisations is the state of the environment surrounding us. Is it stable or turbulent? This has an impact on our innovation strategy. In stable environments, we can afford to concentrate just on getting better at what we’re doing. However, in turbulent environments, we need to undertake more exploratory innovation efforts.

One problem with this scenario is that stable environments can turn turbulent quickly and without warning. Think about the housing markets in the US and the UK in 2008 (and all the markets related to those two). This is the basis of Nassim Nicholas Taleb’s black swan theory.

Lee Smolin makes some important points about coping with these types of shifts. The main thrust of the article is that scientific research may be too conservative these days as researchers focus more on taking a safe approach to facilitate publishing, while not spending enough time on the riskier big questions. While black swan events (things with a low probability of occurring, but which have a large impact if they do actually arise) are often negative in financial markets, they are sought after in science and innnovation.

I found the article through a good post by Roland Harwood. The angle that he thought was most interesting was that the article proposes the formation of markets for research. That is an interesting angle, but not the one that grabbed me. I was struck by this section:

Some scientists, he suggests, are what we might call “hill climbers”. They tend to be highly skilled in technical terms and their work mostly takes established lines of insight that pushes them further; they climb upward into the hills in some abstract space of scientific fitness, always taking small steps to improve the agreement of theory and observation. These scientists do “normal” science. In contrast, other scientists are more radical and adventurous in spirit, and they can be seen as “valley crossers”. They may be less skilled technically, but they tend to have strong scientific intuition — the ability to spot hidden assumptions and to look at familiar topics in totally new ways.

To be most effective, Smolin argues, science needs a mix of hill climbers and valley crossers. Too many hill climbers doing normal science, and you end up sooner or later with lots of them stuck on the tops of local hills, each defending their own territory. Science then suffers from a lack of enough valley crossers able to strike out from those intellectually tidy positions to explore further away and find higher peaks.

This is a nice description of innovating on fitness landscapes, an idea that John and I have been talking about in our classes. And it is particularly important now. There are numerous reports coming out showing that companies have become increasingly conservative in their innovation efforts as a response to the global financial crisis. In Smolin’s analogy, companies are reverting to only undertaking hill climbing. Many have never thought much about valley crossing in the first place, while many others are pulling resources out of more speculative ideas.

This is as wrong for business as it is for science. Innovation is central to survival, and successful innovation requires both hill climbing and valley crossing. Now more than ever it is critical for firms to figure out a way to continue to invest in areas that have breakthrough potential. Newspapers and record companies have collectively been very effective at getting to the top of their hills. And these industries are in big trouble now because they have completely missed on out the discovery of new, better hills. It’s a challenging process to manage in good times, and probably even harder now. But it’s still essential.

One way to cope with this problem is to maintain an innovation portfolio. The idea with this is that we always need to investigate ideas that both help us climb hills and cross valleys. A large percentage of our efforts do need to go into hill climbing. This leads to incremental innovations that keep us competitive.

However, it is essential to always be working on a few ideas that will lead to valley crossing. This can prepare us for times when our environment becomes turbulent unexpectedly. This turbulence can come from an unexpected financial shock, a natural disaster, or the introduction of a disruptive innovation.

In all of these cases, maintaining an innovation portfolio will make you better equipped to deal with this change.

On the innovation journey, we need to be climbing hills, but we also have to cross a valley every now then as well.

(ralf says: Companies should adapt their bonus schemes to the above. And they should become much more rigid about it.

Everybody can do improvements. Improvements are bread & butter. But only if you truly innovate, you will carry your success to your future.

You will have to disrupt. You will have to anticipate, not follow, to inspire people, to lead a market.

You will have to lead your people and your consumers across the valley to where dragons live.)

Tim is a lecturer at The University of Queensland Business School. He researches, writes, teaches and consults on topics relating to effective innovation management, with an emphasis on studying innovation networks. He blogs at The Innovation Leadership Network. Twitter: @timkastelle

[L/M NET] Tim Kastelle > "Innovation Lessons from Startup Genome Report"

(L/M NET: the blogged experience & expertise of some of the best minds in Innovation, Brand Engagement, Communication Agility:
Tom - Tim - Konstantin - Helge - Drew - Charles - Anthony - Adrian)

 

Steve Blank wrote an interesting post today on the Startup Genome Project. The report is based on a survey of 663 startups. All of them are web-based businesses, and they are all early in their lifecycle. The objective of the study is to determine what factors drive startup success, and the report draws some interesting conclusions.

You can read the executive summary and also download the report through this page.

Several of the drivers of success jumped out at me as particularly interesting. While many of the conclusions are specific to startups, some of the ideas apply to anyone trying to execute innovation. Here are some of the highlights:

• Listening is an essential part of innovating: here is how they summarise these findings:

  We examined whether founders learned in the following ways:

  • a) Learning from best practice
    Companies that follow startup thought leaders like Steve Blank, Paul Graham,etc. are 80% more likely to raise money. Almost all companies that raised moneyhad helpful mentors. Companies without helpful mentors almost always failed toraise funding.
  • b) Ability to listen to customer feedback
    Companies that are tracking metrics average a monthly growth rate that is 7xcompanies that are not tracking metrics and are 60% more likely to raisefunding than companies that don’t track metrics.
  • c) Ability to act on feedback
    Companies that fail to listen and act on feedback tend to scale withoutvalidating the size and interest of the market.

  The need to listen is essential in any innovation effort. You need to be sensitive to what the early adopters of your great idea tell you, and you need to be able to respond effectively to what you learn.

• Innovators are motivated by a strong sense of purpose: when asked why they started up their firm, 68% said it was to have an impact, 27% wanted to gain experience, and only 5% did it to make money. This is very consistent with Dan Pink’s contention that to motivate creative people you need to give them autonomy, mastery and a sense of purpose. The desire to have an impact is very strong in innovators – much stronger than people usually think.
• The more successful startups change their focus at least once, but not too often: in Silicon Valley language, this is referred to a pivoting – changing the focus of your business model. This is how the report phrases it: “Startups that pivot once or twice times raise 2.5x more money, have 3.6xbetter user growth, and are 52% less likely to scale prematurely than startupsthat pivot more than 2 times or not at all.” Changing focus too much is bad, but so is not changing at all. This relates to the first point about the importance of listening. You usually won’t have your idea exactly right on the first go, so you have to listen in order to figure out how to change. This is consistent with the little bets approach advocated by Peter Sims.

Innovation is a discovery process as much as it’s anything else. The Startup Genome Project shows that this is true for entrepreneurial startups, and it is also true for people trying to innovate in other settings.

(ralf says:
And without contradicting Tim I would like to add: Innovation is a Culture - Not a Process!)

Tim is a lecturer at The University of Queensland Business School. He researches, writes, teaches and consults on topics relating to effective innovation management, with an emphasis on studying innovation networks. He blogs at The Innovation Leadership Network. Twitter: @timkastelle

[L/M NET] Tim Kastelle > "Make Little Bets for Innovation Success"

(L/M NET: the blogged experience & expertise of some of the best minds in Innovation, Brand Engagement, Communication Agility:
Tom - Tim - Konstantin - Helge - Drew - Charles - Anthony - Adrian)

To succeed at innovation, you need to be making a lot of little bets. What are little bets? According to Peter Sims in his excellent book called Little Bets, they are:

A small, affordable action that anyone can take to discover and develop ideas.

Here is a more complete explanation in an interview with Andrew Keen:

 

When I was in Silicon Valley a couple of weeks ago, there was a huge buzz going around about the book, and I was fortunate enough to hear Peter talk about it at a TEDxBayArea event. Interestingly, two different people who had read the book used almost identical words to describe it – they both said something like: “If you’ve been reading the research there isn’t anything new here, but he pulls it together really well.”

That doesn’t sound like the highest of praise, but it actually illustrates one of the main points of the book perfectly: that ground-breaking ideas don’t always look ground-breaking when they launch, instead, they tend to build up out of a series of experiments. Sims has done a great job of connecting up a bunch of ideas that were already out there in a novel way, and building an important new idea out of them. This is the essence of innovation.

He includes a great quote from Steve Jobs that explains the importance of connecting up ideas:

Creativity is just connecting things. When you ask creative people how the did something, they feel a little guilty because they didn’t really do it, they just saw something. It seemed obvious to them after a while. That’s because they were able to connect experiences they’ve had an synthesize new things. And the reason they were able to do that was that they’ve had more experiences or they have thought more about their experiences than other people… Unfortunately, that’s too rare a commodity. A lot of people in our industry haven’t had very diverse experiences. So they don’t have enough dots to connect, and they end up with very linear solutions without a broad perspective on the problem.

There are several key actions that you can take based on reading this book that will make more innovative, including:

• Focus on what you can afford to lose, rather than what you might gain: This is similar to my suggestion that you do as much as you can get away with. The critical point of little bets is that they are little – so if they don’t work, you don’t lose too much. Don’t try to figure out the net present value of a potential idea based on growth projections in which no one can ever have any confidence. Just find a way to test your idea as quickly and cheaply as possible. This is central to any little bets approach.
• Build as much diversity into your personal network as possible: the best way to make these creative, novel connections between ideas is to have a diversity of experience, and to encounter a diversity of ideas. One great way to accomplish both is to consciously build links with people that don’t think in the same way that you do. Tom Peters sums this up perfectly: Hang out with the freaks. Peters has been making this recommendation for a long time – find the people that are outsiders, that don’t fit, and spend time talking to them. It’s the easiest way to start making novel connections between ideas.
• Don’t expect to have a great big idea come to you in perfect form: the reason that Sims marshalls all of the evidence that he has is to show us that big ideas don’t spring fully-formed from peoples’ minds. Instead, they build over time. As Linus Pauling said, the best way to have a great idea is to have a lot of ideas. The belief that we have to have a great idea in order to start something is a myth, and one of the main ones that Sims is trying to dispel. If you won’t start until you have a great idea, you won’t start. Instead, it is better to execute an idea, any idea, figure out what works, and build from there (he expands on this idea in an excellent interview with Nilofer Merchant).

It’s no coincidence that John and I have used the word “experiment” in 103 different posts on this blog. We keep talking about it because it works, and anyone can do it. To innovate, you need to figure out how much you can get away with (how much can you afford to lose?), figure out how to test an idea within the scope that provides you, learn from your experiment, and build on it.

That’s a little bet.

That’s innovation.

If you want to learn more about the book, here is Sims’ talk as part of the Authors @Google series:

 

(ralf says:
As diversity is crucial for innovation we try to achieve that at least a little by building the L/M NET. Sometimes you might think we show you strange things, but they are just sparks to your imagination. You take those into your business context and they connect with your experience, ie. creating new sensations.

Have a look here too: Innovation is a Culture - Not a Process!)

Tim is a lecturer at The University of Queensland Business School. He researches, writes, teaches and consults on topics relating to effective innovation management, with an emphasis on studying innovation networks. He blogs at The Innovation Leadership Network. Twitter: @timkastelle

[L/M NET] Tim Kastelle > "Am I Allowed? - Nilofer Merchant on Innovation"

(L/M NET: the blogged experience & expertise of some of the best minds in Innovation, Brand Engagement, Communication Agility:
Tom - Tim - Konstantin - Helge - Drew - Charles - Anthony - Adrian)

 

Here is an outstanding talk from Nilofer Merchant (and an interesting post about the background to it) – it is well worth your time:

 

Here are some of the key points that jump out at me in this talk:

• New ideas should change us: One of her first points is that even though people frequently talk about being in favour of innovation, in practice many of these same people actually block it. Why? Because new ideas lead to change, and we often don’t like to change. Do we secretly resist innovation? This is a question that merits serious thought.

  I was fortunate enough to talk with Nilofer face-to-face last week. We discussed a variety of things, including management books. She strongly made the point that if we’re going to write things that genuinely have an impact on people, then we should be explicit about how we want them to behave differently after reading these offerings. New ideas should change us, and we should be conscious of this whenever we create, share, or encounter new ideas. And we should be open to this in all of these situations as well.

• The key question that you encounter about innovation is: Am I Allowed Here? Are organisations serious about wanting ideas from people? In many cases, again, there is a gap between the rhetoric and the practice. This relates very strongly with the first point. Seeing the world differently drives innovation. But in many places, seeing the world differently is not welcome – and this contributes to the feeling that you’re not allowed to innovate. Giving yourself permission is often the biggest step you take in becoming innovative. If you’re a manager, supporting people who see the world differently is critical.
• We often filter out ideas that we haven’t encountered before: normal is good, and fitting in is good. At least, that’s what our brain tells us. One consequence of thinking this way is that if we run across an idea that is novel (at least to us), we block it out. This is a problem. A lot of our management practice is designed to reduce variation – to make things more efficient, to eliminate problems, to turn as much of our work as possible into a routine, or an algorithm. But innovation requires increasing variation.
• Ideas grow when they are shared: the last big idea in the talk is that ideas get better when they’re built upon. In order for this to happen, we have to let them go. This again is counterintuitive. Our great ideas are ours, right? Nope.

These are just three of the ways that we block innovation, even if we think we’re in favour of it.

How I’d Like You to Change Your Behaviour After Reading This

Here are some things you can do to address these issues:

• Give yourself permission to innovate, even if you think you’re not allowed to.
• If you’re a manager, find ways to support people that increase the diversity of ideas in your organisation. Don’t just focus on improving efficiency.
• Make a conscious effort to run across new ideas. Subscribe to blogs that you don’t agree with, or that make you mad, and engage with these ideas.
• Let your next idea go. Share it, and see how it grows.

Ideas have power, and great ideas should change how we act. And remember, that’s how we act, collectively.

(ralf says:
Start with small ideas and innovations. Get used to it yourself. Let your people get used to ideas and innovation.
People kill ideas, if they feel uncomfortable, because these ideas change grown behaviour, change ways of working, doing business, getting done your daily routine.
Try to get people to think, ask them for their opinion, their experiences, their ideas(!). Try to get people to write their own agenda, not yours.
Try to get people acquainted to small changes of behaviour. Let them lead the  meeting. ...
If they love all this, talk about that great feeling of embracing change, being creative, and innovative.
Then try the next step, the bigger idea ...

Innovation is a culture - not a process!)

Tim is a lecturer at The University of Queensland Business School. He researches, writes, teaches and consults on topics relating to effective innovation management, with an emphasis on studying innovation networks. He blogs at The Innovation Leadership Network. Twitter: @timkastelle

[L/M NET] Tim Kastelle > "Innovation Myth: Ideas Spread Quickly"

(L/M NET: the blogged experience & expertise of some of the best minds in Innovation, Brand Engagement, Communication Agility:
Tom - Tim - Konstantin - Helge - Drew - Charles - Anthony - Adrian)

The future’s already here, it’s just not evenly distributed, and it doesn’t look like we expect it to

When scientists first started talking about Artificial Intelligence in the 1950s and 1960s, a lot of the discussion centred around how to best create AI that would think like people do. This view of AI has dominated our imagination ever since.

Think of HAL in 2001: A Space Odyssey, Deep Blue and other chess-playing computers, Skynet and the rise of the robots in the Terminator movies, and all the current discussion about the singularity. All of these are pictures of Artificial Intelligence doing what human intelligence does – just doing it faster, or better.

Over 50 years later, except for the chess-playing computers, we’re still waiting for this form of AI to take off.

Because we’re not seeing this type of AI, AI has been a failure, right?

Well, not really. There’s actually tons of different types of AI in practical use right now. An article in Wired UK outlines many of the current uses of AI, and it’s an impressive list: warehouse stocking robots, the google search engine, algorithmic financial trading, credit card fraud detection, and self-driving cars, just to name a few.

Even though we don’t have Skynet yet, we’re still interacting with AI throughout our day, often without even realising it.

The Long S-Curve of Innovation Diffusion

The story of AI illustrates a common innovation myth – that ideas spread quickly.

Around the time that computer scientists first started thinking seriously about AI, Everett Rogers was showing that most innovations follow an S-Curve as they diffuse through the economy. The Innovation Diffusion curve looks something like this:

Ideas are first picked up by people that Rogers referred to as Innovators, then Early Adopters. This is happening over the time period that I’ve labelled “X” in the diagram. Eventually, the new idea either dies off, or it takes off. Once the tipping point occurs, the idea then spreads rapidly throughout the market, until a saturation point is reached.

When people are innovating, or thinking about innovations, one huge mistake that they commonly make is to underestimate how long the idea will stay in the X range.

Here’s an example: email. The first email was sent around 1971, just a few years after the internet started. For a long, long time, email was only used by researchers, the military, and academics. It wasn’t until the late 1980s that universities started to make email available to students (that’s when I got my first email address).

By the early 1990s, the World Wide Web was built on top of the internet, and then email started to spread a bit more quickly. By 1993 or so, it was becoming relatively common among early adopters outside of academia. But even then, the question that you asked if you wanted to send someone an email was “do you have email?”. And in just a few years, suddenly everyone had email. By 1996 or so, the question was a simple “what’s your email address?” That was the tipping point. In another five years, it was “which email address should I use for you?, because everyone had a personal email address, one for work, and often a few more. Email had reached saturation.

If you thought that email started with the WWW in the early 1990s, X was only four or five years. But if you think of the whole story, X actually lasted about 25 years.

This is pretty common for new ideas. Xerography was patented in 1936, but the first Xerox machine didn’t hit the market until 1949. The technology didn’t take off for another seven years or so. X was about 20 years for this idea.

Even in the fast-moving internet age, X is often a lot longer than we expect it to be. Jeff Bezos had the idea for Amazon in early 1993. It took about two years to get the site up and running. In 2000, people were still calling it amazon.bomb, among other things. It didn’t take off until about 2002. X was about nine years for Amazon – and that’s one of the shortest time periods that I’m aware of.

The Reasons for the Long X

The unusually long period of X for new ideas is due to several things. Most of them have to do with uncertainty – we don’t actually know what the new idea is for yet. This happens in a few ways:

• We have to figure out how to make the new idea work: the best use of a new idea is often not obvious. In fact, because we tend to think in analogies, we often get this wrong at the start. In the AI example, the technology didn’t start to really take off until people stopped asking “how can we make computers that think like people?” and they started asking “we have computers that do some things that people can’t do well – how can we make use of this?” Going through this process takes time, and it requires a lot of experimentation. Many of these experiments will fail – but one of the critical things that we have to figure out is under which circumstances the new ideas work, and under which ones they don’t work so well.
• We have to fight against the hype cycle: the long X is a direct contributor to the hype cycle. The Early Adopters get excited about the new idea, and it gets oversold. Then the people that are threatened by the new idea fight back. When it doesn’t spread as quickly as expected, the excitement wanes and cynicism sets in. Eventually, though, through experimentation we figure out what the best use of the new idea will be, and at that point it is finally poised to take off.

  Greg Satell explains this process very well in his post Why Trends Are For Suckers. This is what the hype cycle looks like – you can see the long X at work in it!

  

• Most importantly, we have to figure out how to create value for people with the new idea. This is the part that the Early Adopters tend to ignore – they usually like new things simply because they’re new. For everyone, the new idea needs to solve a problem. Avinash Kaushik explains the issue perfectly in 11 Digital Marketing Crimes Against Humanity:
  

  When I look at winners and I separate them from the losers there is one thing that stands out. Winners have a sophisticated understanding of the holistic success of their digital existence. It comes from undertaking two simple steps: 1. Identifying their Macro and Micro Conversions and 2. Quantifying Economic Value.

  I tend to talk about the need to create value more broadly, not simply economic value – but in either case, without clear value creation, the new idea will never take off. Again, it takes some time to figure out where how to create this value, and often the value being created isn’t the value that was originally expected.

The Myth of Quick Adoption

Our tendency to dramatically underestimate the true value of X in innovation diffusion causes all kinds of problems. If we’re early adopters, we expect new ideas to spread quickly. And yet, they don’t. If we’re threatened by new ideas, the long X can give us a false sense of security. As it becomes clear that early predictions are exaggerated, we become complacent. But eventually, once all the experimentation has been done, and people have figured out what the new ideas are really good for, and how to create value with them, the threat begins to bite.

I’m not sure of any way to move through the innovation diffusion curve more quickly. It is by its very nature slow, experimental, unpredictable, exciting, revolutionary and wasteful. It is part of what makes innovation both exhilarating but also frustrating.

Being aware of the myth of quick adoption is the first step towards figuring out how to deal with it.

(ralf says: Most of us do not have to fear the above in their daily business, because that is only true for real innovations! But for some of you that will make the learning even more valuable. If you have a true innovation you will exaggerate its spreading among target groups because you loved it immediately and 'people will love it immediately too'. No, they won't, we just learnt.

You need a basket of new products: a true innovation, where you take your time, and some new products and flankers, where you make the money to be invested into your true innovation, your game changer.

Remember, it makes more sense, to be surprised by the speed of consumer adoption than by the slowness!)

Tim is a lecturer at The University of Queensland Business School. He researches, writes, teaches and consults on topics relating to effective innovation management, with an emphasis on studying innovation networks. He blogs at The Innovation Leadership Network. Twitter: @timkastelle