A few years ago I had the pleasure to work with Yves Behar at fuseproject. He was the designer for the One Laptop per Child laptop and then the tablet (the project I lead). Yves has many talents, as would be expected from a world class designer, but what I always noticed was his unwavering focus on understanding the customer.
This story from the fuseproject blog, "On Crafting Wearability", makes the customer focus clear. I inserted the bold to show the insights about the customer in the reprint of the story below.
"Wearables represent an immensely excited and daunting design challenge. There are very few things, let alone electronic devices, that we wear on our bodies 24/7. In fact, we entered wearables because we felt that, in addition to our technological assets, the key to true success would be creating something inspired and unique -- something you would love to wear. Delivering on these principles is not easy. It takes time, commitment, invention; these combined with great engineering and never tried before manufacturing methods has led to a new collection of UP2 and UP3 offerings.
UP2, already the slimmest and lightest wearable on the market, has been reimagined with a new style strap, making it look even smaller on the wrist. The rope-like TPSIV rubber band with a polished metal hook is a new style that is extraordinarily comfortable and graceful. The open strap gives more breathability on the wrist, while looking complementary next to a watch or jewelry."
Would you have researched wearables well enough to draw the insights bolded above? I particularly like the insight about the wearable looking good with a watch or bracelet.
We have been experimenting with IT technology in schools since the 1990s. There is limited evidence that it improves learning outcomes. As many have pointed out, including Papert and Christensen, if we use the technology to teach the same way as before, do not expect different outcomes. For example, computer-based flash cards are no more effective than paper flash cards.
This story from Official Google for Work Blog about using a new chrome extension in the classroom brought the point home again. The writer talks about how now a teacher can project on every student screen the same page instantaneously. Such a feature makes it easier for a fourth grade teacher to get every child to the desired website faster.
This extension just reinforces the long standing hierarchical style of teaching where the student is given the information to learn. Overlooked was the opportunity for the child to search, learn to search and more importantly share their web page face-to-face with other children.
Note: As long as Google focuses on making teaching easier for the teacher, don't expect any change in learning outcomes. Link for Share to Classroom extension.
Friday I had lunch with a very talented business owner I have known for about two years. I was told that one division of the business (the origin of the company) was on hold, one division was growing revenue at low double digits and a new product line in a new division was about to launch. I told the owner that I now recommended for early stage and small businesses to target at least 100% annual revenue growth, as a means to build a company that can scale. The owner's response was "I do not want to scale".
Here are the three reasons to scale a business:
Stanford Business has a new article out this week, "Exploring the Ethics Behind Self-Driving Cars". It is a great article if you teach ethics in an academic setting, but the more important point is to put us all on notice. There are many new issues we need to address as artificial intelligence is added to our lives.
The article frames one conundrum. Should the car be programmed to protect your life or should it also consider the lives of pedestrians and people in other cars. Personally I think we should separate the car from the software. I can buy my car from BMW but the AI software comes from Google or Apple or MIT Automotive. Yes, there may be some issues similar to using Windows on so many different computers, but I could pick the moral position I want. No General Motors ethics for me. (BTW, whose software would you trust more--General Motors or Google or Apple)
By chance I talked to some industry people on this topic last week. They say that their analysis shows that driverless cars will have fewer accidents than human drivers. Maybe, as soon as we eliminate all human drivers we will not have so many ethical questions and the professors at Stanford can go back to thinking about Resource-based Theory.
What do you do when you have a breakthrough diagnostic medical technology that needs more partners to develop multiple use cases? How do you find the "best and the brightest" individuals to partner with? How do you find these people with no concern for their age, background, culture or any other discriminatory factor?
Meet Protean Labs.
To become a Protean Fellow you simply need to submit the answer to one of five questions listed under the Apply Now tab on the website. If accepted:
"Join us for a one month Protean Fellowship. You may choose to work on a problem defined by you or alternatively, a problem assigned to you by Protean Labs. You will be given access to research lab space, equipment, reagents and access to our scientific network. You will be expected to demonstrate self-efficacy and resourcefulness. At the end of your fellowship, a stop-go decision point is reached. If you have sufficiently demonstrated the potential for your project to succeed as a startup proposition, you will progress to the next phase where you will become a Partner in Protean Labs working with us to spin-off your technology into an independent company. You will be given the option to lead this company."
Just to say it again, applicants of any age will be considered.
I have been teaching social entrepreneurship for five years at FIU in the Honors College and at MIT Sloan, which was made possible in part by my 3+ years as CFO of One Laptop per Child (OLPC). OLPC was started by Nicholas Negroponte and faculty at the MIT Media Labs to provide every child in the developing world with a connected laptop. OLPC started as a donative non-profit but converted to a social entrepreneurship model in 2009. I joined to carry out this change in business model at OLPC.
Steven Weinberg, Nobel laureate physicist, says he teaches a new course to learn a subject. I do the same thing, but courses are better for organizing conceptual thinking and writing books I think is a better method to organize practical thinking. So when I think I understand the practical side of a subject, I write a book to confirm it to myself.
The first half of my new book, Scaling Social Entrepreneurship: Lessons Learned from One Laptop per Child, deals with defining social entrepreneurship. I do this in part by contrasting it with government, non-profits and NGOs. Two themes are developed in the first half of the book:
Organizing a social project is not particularly challenging, but organizing something that can scale to multi-country or Google scale is very challenging. In attempting such an effort one has to plan for worldwide coverage from the beginning. In traditional entrepreneurship, one gradually reaches the point of scaling after product/market fit and commercialization. In social entrepreneurship, early on one needs to find the model because lower operating returns and less startup capital do not give you the flexibility to iterate. This fact is even more true if you operate as a non-profit.
The second half of the book is devoted to the business model to scale a social venture. I strongly recommend in favor of for-profit companies in order to have better access to capital markets. I believe evaluation needs to be baked in from the beginning because access to social impact funds is becoming increasingly competitive. I advocate that one try to establish a movement to support the social objective, something akin to Gandhi, Mandela and King. That may look like a difficult undertaking, but OLPC achieved that objective--worldwide 1:1 computing for children. Lastly, I cannot say enough about the importance of partners to a social entrepreneurship venture and I recommend private sector partners.
The book is available in both paperback and Kindle versions on Amazon. I would be happy to sign a copy of the book that you give as a gift. I also think it makes a fine introduction to social entrepreneurship for a corporation looking to transform its corporate responsibility program into something more substantive.
This video on Big Think describes corporate learning at IBM. Corporate learning is the company-wide method to provide lifelong learning to IBM employees. The program covers mostly current topics in IT but, of course, that is IBM's domain. Format appears to be a MOOC.
Most interesting part of the story is that the CEO established the program and teaches a course once a month. Leadership from the top makes the commitment and objective obvious.
I think that more formalized, high value corporate training will become a big business opportunity. The business environment is becoming more complicated as AI and Big Data are more integrated into day-to-day business. Companies are increasingly narrowing the range of their business expertise partly by relying on third party providers, which will require companies to be extremely vigilant in their area of expertise. Lastly, knowledge is doubling every 13 months, which means there is 8 times more knowledge every three years. Such a scale of growth in knowledge puts pressure on companies to help their employees to stay current.
SSIR has an interesting article, "Why Criticism is Good for Innovation". The article advocates the use of a rubric to evaluate new projects or products. A rubric is a scoring tool to evaluate criteria relevant to an analysis. The real value is that referring to the rubric reduces the risk that a comment is taken as a criticism, thereby potentially demotivating the creative type. The article does not suggest the outline of such a rubric, but I will.
For a new product or project, a rubric should evaluate the feasibility of commercialization. The factors that should be considered would include:
Perhaps assign ratings of high, medium and low to reflect attractiveness or risk. Smarter yet, work on each factor until it has a high positive rating.
These factors should give one sufficient opportunity for feedback on objective issues such that one would never make the "criticism" personal.
I have become something of a collector of different models of social entrepreneurship. For the purposes of being accepted as an example of a different model of social entrepreneurship, the company must be for-profit and have a unique way of delivering measurable social impact. The examples I have collected are not necessarily the first such companies. The only distinction I make is I do not accept CSR projects.
Two examples recently caught my eye:
Wonder how much seafood, if any, Carnival buys from Norton Sound or any other native corporation in Alaska. The new division should consider such questions.
In the period 1950-1980 U.S. companies built an infrastructure to provide the consumer lifestyle we all know and appreciate. With the advent of computers and globalization, in the period 1981-2010 financiers de-constructed the infrastructure through leveraged buyouts, arbitrage, derivatives and specialized finance to realize vast amounts of untapped or dormant value. As the opportunities became more scarce, leverage was used to improve returns.
A poster child for this second period of "financial engineering" was GE Capital, who dominated many financial services for businesses. Not only did they provide financing at better terms than commercial banks to finance purchases from other GE divisions, but they also pioneered "new" products such as private label credit cards for large retailers.
The NY Times reported today that GE Capital is completing the tasks to basically wind down this division of GE. Many blame the financial crisis of 2007-2008 for the demise of GE Capital. Others would point the finger at increased regulation post crisis. I think GE Capital got swept up in the craziness of the ten years preceding the crisis and lacked the financial controls to properly manage the business. Of course, this is the same reason AIG, Lehman Brothers, Merrill Lynch....all failed in one way or another. Financial controls for financial operations appears to be an area where we still have much to learn. To just write the errors off to greed is to miss the opportunity to learn.
Perhaps because Google won a big contract to provide Office apps to PwC (the large international accounting firm), they have recently launched a PR campaign all over the web for "Google Apps for Work". An example of the PR is this Silicon Alley Insider story, "Google shares its plan to nab 80% of Microsoft's Office business". A sentence in the article caught my attention:
"Google is constantly looking at how people are using Apps and trying to entice them to use it more."
Google is renown for using data in its product analysis, which perhaps makes the above quote mundane. However, I think it points out the problem with Google's approach to software. Data only describes current usage. If we examine saving a file in Google Docs, Google sees it saved online, perhaps Google sees it downloaded to the computing device...but Google never sees it then saved in Dropbox. You might ask why someone would prepare a document in Google Docs and save it in Dropbox. There are probably ten good reasons, none of which show up in Google's user data.
Microsoft recently launched a new Outlook app for iOS 8, which I tweeted :
Nine days later, I think that Outlook is probably the best mail iPhone app ever...and it includes a good calendar app. If the Outlook calendar app had appointment multiple alerts I would stop using a calendar app. What I particularly like about the app is the seamless integration with Dropbox and Google Drive, both of which I use daily. (Dropbox holds the docs I produce and Google Drive holds third party documents.) It also seamlessly integrates Gmail and other mail providers.
I am not a Microsoft fan boy. For many years I competed with them and I intentionally avoided their products. The only nice thing I could say about Microsoft was to my entrepreneurship students--"Microsoft is an excellent example of monopoly, which economists tout as an attractive business model". With the passing of time I have mellowed on Microsoft. (A tweet rather than a full blog post shows that I am still conflicted.) I tried the new iOS Outlook partly because in 25 years of using email, I have never found an email app on any device that I really liked until the new Outlook. However, let's get back to Google.
How was Microsoft able to develop such a great new mail app, while Google is still constrained by its data. The answer is quite simple. Most of the design and code for the new Outlook came through an acquisition, where the previous company was not constrained by the corporate mindset of a Google or Microsoft or F500.
I imagine when the Microsoft execs saw the other company's mail app, they just thought OMG and quickly bought the company. I commend Microsoft for admitting somebody understood the customer better and did a beautiful design. I wish Google would make some app acquisitions, get a better understanding of the user and perhaps learn more about UI design. BTW I use a lot more apps from Google than Microsoft, but I hope that Microsoft's new acquisition has some new ideas for other apps. Today I am less hopeful about Google.
In the early 1980s I invested in one of the earliest online retailers, Comp-U-Card. Comp-U-Card succeeded and went public by understanding that customers were only willing to buy hard goods, such as autos, TVs, air conditioners, etc, and would not buy fashion items and accessories. In the early 1990s shoppers grew comfortable with buying fashion online. Today we buy everything online, in part thanks to the success of Amazon.
Many have published stories recently about Amazon pulling its diaper product, including Venture Beat here. Venture Beat also lists other product or merchandising failures, such as a payment wallet and a phone. Everyone talks about these failures as if Amazon was a retailer. I think that is the wrong way to think about Amazon. Amazon is an exchange operator that facilitates the widest range of suppliers and customers entering into transactions. Amazon's expertise is in the infrastructure to support the exchange, which perhaps explains why they have been so successful providing a non-retail service like cloud services.
When Amazon starts to think like a retailer and introduce private label products, such as diapers, they move far away fom their expertise in IT infrastructure and fail. This logic would also explain why wallets and phones were not successful. Retailers succeed in part by selecting merchandise for their target customers. Exchanges succeed in part because their infrastructure supports the needs of the exchange users. While some expertise is needed at a product level, many exchanges tend not to be discriminating. This is the case with Amazon's strategy to sell everything, from consumer products to boat parts to building supplies. Think of Amazon as an exchange and not a retailer.
There was much discussion this weekend about Jerry Neumann's article, "Heat Death: Venture Capital in the 1980s", which chronicles the evolution of the venture capital industry from its start in the 1960s.
One interesting part of the article was how the industry learned about the difference between market risk and technology risk. Market risk is "will people buy it" and technology risk is "will it work". In the current period, VCs generally take market risk and avoid technology risk.
However, as I thought about this dichotomy, the logic of "do something better" kept coming back to me. This approach minimizes both risks or at least frequently does, by taking an existing technology and customer base and offering something better. Google and Apple computers would be examples where the state-of-the art was advanced a bit but there was little breakthrough in terms of technology or customer base. (Amazon might have been an example of market risk and Akamai might have been an example of technology risk when they launched.)
Perhaps one is well served to understand where the business concept is on the continuum of both market and technology risk and to realize that great opportunities may exist with small changes in the market or technology risk factor.
A friend is a curator at a museum. One exhibition is of the journals of soldiers from a particular war. Interesting research material, but not available anywhere on the web in digital form. As time passes this material will be largely forgotten because it has almost no digital signature.
If teachers asked their students to read this material and transcribe it to a digital form, the students might be more engaged with history and this material would be available to the world online.
Obviously there is much handwritten material of historical significance beyond war journals that we should transcribe to digital. Might even be a way to teach foreign languages based on the material selected.
Clayton Christensen has written extensively about why large corporations cannot innovate and are disrupted by entrepreneurial startups. In summary, such large corporations are challenged to understand markets that are not already documented and suitable for ROI analysis based on cost savings. A third reason may be that no one has yet developed and documented a process that the Fortune 500 can use to innovate. Some corporations are using design thinking, but such an approach may be too "touchy feely" and hard to use for widespread corporate adoption.
An alternative approach might be to go back to "business model" thinking and see if that provides an answer. In other words, can we change the business model for an existing product/market and create new value a customer will pay for. Let's suppose we look at five key parts of the business model:
In my way to think about the revenue growth driver, there are five drivers--SANDS. 1) Subscribers, 2) Accounts, 3) New Locations, 4)Distribution and 5) Sales people. These are the five basic strategies to grow revenue, which are more fully described in my book. To innovate, consider whether you can change the growth driver or use a different growth driver in a particular market. There are 16 pricing methods (see book). Perhaps adding a new pricing method or two leads to increased value for the customer or perhaps spurs a reconsideration of the product to better match the philosophy of value creation from the new pricing strategy. A similar logic would be applied to distribution to see if a new channel might create value for new customers.
Value creation and stakeholder analysis require a separate explanation because they are harder to do. In value analysis we do a "deep dive" into understanding where the customer (not the company) finds value through face to face research and interviews and focus groups and... Then we look at how we would increase the value for the same or a new customer, wherein lies the innovation if the innovation is saleable.
Stakeholder analysis looks at what value each stakeholder captures in a transaction. Stakeholder is defined broadly to include everybody touched by or touching the product, including regulators, unions and traditional constituencies such as customers, employees and shareholders. Again, heavy lifting analysis. Once the value is understood in terms of stakeholders, then we can examine how to increase that value which results in innovation if the change is saleable.
This approach may not yet be fully thought out, but the notion of revisiting the fundamental parts of an existing business model to identify new value that can be commercialized may be a way for large companies to find innovation.
BCG's 2014 report on innovation, "The Most Innovative Companies 2014: Breaking Through is Hard to Do" focuses on the challenges to create innovation.
The discussion of value creation and stakeholder analysis is derived in part from some work done on design thinking by the Taiwanese Government.
The most recent previous post on disruptive innovation and Christensen is here.
By choice I read about 200 blogs every day. My reading has grown from about 100 blogs three years ago probably because my interests have increased. After Google reader died I have been very happy with Feedly to manage my blog reading. I also use Google+ to get a more international perspective on my interests and I use Facebook to get a local perspective on entrepreneurship and social entreprenership. I only use Twitter to distribute my content and rarely read it, although the Spanish language content on entrepreneurship is excellent.
There are two content providers that I read on their blog, Google+ and FB:
My experience is that I find different articles on different sites for each of these sources. In other words to get all the content from either one I have to go to three places on the web (or maybe more). No one "channel" offers all the content for either publication. In fact I stay on FB because I like the SSIR articles and one person who posts interesting stuff on local Miami entrepreneurship.
My question is "why can I not find all the SSIR or HBS content in one place with an RSS feed"? Why do I have to go to three sites? The answer is that HBS and SSIR are tailoring their content to the distribution channel--FB, Twitter, LinkedIn, etc. in the mistaken belief that the users are different on the channels. This is a mistake. I am the same person with the same interests whether I am on FB, Google + or LinkedIn. World class publications such as SSIR and those from HBS need to put all their content in one place to make it easy for the user. They can still duplicate all their content on FB, Google+ or LinkedIn, but I will follow them in only one place.
As content increases and the hosting sites multiply, world class publications will be better off to concentrate all their content to make it easier for the user. A better user experience will be appreciated.
This weekend I read an article in Pieria, the British equivalent of 3 Quarks Daily, both of which promote intellectual thought (2008) on a wide range of subjects. In Pieria a writer defined the extremes of thought on economics as Marxism and the Austrian School. Given my hearty respect for the Austrians, I was somewhat disturbed to be categorized as an extremist.
I actually think anarchists are at the opposite extreme of Marxists, but the anarchists write very little about their economic system. Marxists define the one extreme because of their heavy reliance on centrally planned economies, whereas the anarchists advocate for no government and consequently no regulation. However, I digress.
The Austrians were probably the first economists to acknowledge the role of self-interest in markets and economic activities. From these writings many derived a negative view of capitalism and the Austrians. Both the capitalists and the Austrians have suffered from this association with self-interest for over 100 years, the same period in which perhaps the greatest economic development in history has taken place. What has been overlooked by the critics is one simple fact:
" A man may promote the interests of others even though the interests he seeks to promote are his own. " (1)
If you do not understand this quote, then it could be re-stated:
What has been overlooked by the critics of capitalism and many capitalists is that the most fundamental premise of capitalism is that one serves one's self-interest by serving others....profitably.
An additional article on intellectual thought from 2012.
(1) Arthur Shenfield 1970 Modern Age article “The Ideological War Against Western Society” courtesy of Cafe Hayek
This really interesting article on Brain Pickings referenced a quote from NPR:
"NPR recently shared a survey that found 40% of the American public doesn’t believe the world is more than 6,000 years old."
Of course, when was the last time you saw a reference to something older than about 2000 BC or about 4,000 years ago? Given the peculiar nature of Americans, we rarely reference anything that pre-dates the founding of the U.S. All of this just points out that we have a predjudice in the Kahneman sense with respect to time or perhaps more precisely history. The brain conserves energy by considering a very short timeline compared with the actual time that humans have walked the earth.
What this suggests is that we do not study and understand sufficiently the basic nature of humans, which may be constraining our abilityto really understand consumer problems and develop new business concepts.
If we go back about 40,000 years, two interesting things happened which enabled early humans to advance beyond their then current status as hunter gathers. First humans learned to trust beyond their immediate family and tribe and technology appeared for the first time. Technology allowed abundance and scarcity, fundamental economic concepts, to appear, which led to sharing (which required trust) and specialization. Specialization led to barter and the emergence of those efficient organizations called "firms", another economic term. However, as specialization and firms succeeded and made lives better, barter broke down and the more efficient money emerged. Congratulations, we have now reached approximately 12,000 BC.
Now we can argue about whether trust preceded sharing or not and whether firms came before specialization, but what is clear here is that the fundamentals of civilization include:
You might ask why this is important. The reason is that every time you change one of these four concepts a huge new market opportunity emerges. A huge new market opportunity emerges! For example, look at this abridged list of changes in money:
Every single change created a huge market opportunity and large companies that recognized the opportunity.
If you can insert trust or sharing into a new situation, one spawns a huge market opportunity. Ebay succeeded when it solved the issue of buyers trusting sellers, Airbnb allowed us to share our real estate. Amazon redefined the retail "firm".
Not a lot has been written about the techniques to identify the large market opportunities. Change one of the four fundamentals of civilization and you may have a large opportunity.