Sometimes one has to sit back and just wonder about the human brain and how it works.
As long time readers know, I think that the design process may be the best way to understand the method to develop a new business concept. With the exception of Nicholas Negroponte, I know of no one else who shares a similar view.
Today I was reading Edward Slingerland's What Science Offers the Humanities and came across an interesting fact. About 40,000 years ago there was what Slingerland called the "cultural big bang" and anatomically modern humans evolved the ability to do representational art. From this ability "the floodgate was opened to an unstoppable wave of continuous cultural innovation leading to multiple piece spears to complex boats to laptop computers". If art was the breakthrough ability to permit cultural and technological innovation, then it is not surprising that the design process would be a good model for developing a new product and hopefully a new business.
Slingerland's book deals with how the mind body duality is being collapsed by advances in neuroscience. Advances in neuroscience are a hugely important area of future research that will change our understanding of the term "human". If you want to better understand neuroscience and the philosophical issues that it questions, read the book.
My second book deals with social entrepreneurship and uses examples from my time with OLPC . After Grameen Bank, OLPC may be the next largest company using the social entrepreneurship model. Social entrepreneurship is in its infancy as a concept and deserves further explanation. The need is all the more important now that Michael Porter's concept of "shared value" is getting so much publicity. I am about 3/4 of the way through writing the book and should finish it this summer or as soon as I stop traveling nearly every week.
I am also thinking about a third book on assumptions and their role in innovation. Anyone interested in helping with the research should contact me.
I have been thinking about what I want a tablet to do. From talking with a lot of power users I know that a tablet will never be my work machine for book writing, building Excel models or editing the work of others. I am also confident that tablets will not become the principal computer for college students for similar reasons.
What I want a tablet to do is:
Access the Internet through WIFI
Retrieve and read email
Open and read email attachments such MS Office documents
Run apps or widgets for FB, Twitter, Evernote and Skype or Google Talk
Have a battery life of 7-10 hours
Weigh as little as possible
I have no interest in playing games, watching videos, or finding the nearest __________.
Online.WSJ.com provided a nice solution to my requirements. Hack the Nook book reader from Barnes & Noble. With the hack you have a fully functional Android tablet. Warning: if you blow installing the hack the Nook becomes a paper weight.
Why doesn't Barnes & Noble sell the machine as a cheap Android book reader. Probably because it would then be able to download Kindle software. Of course with Barnes & Noble stock price in the dumptser, it might be time for what the Stanford entrepreneurship mafia calls a "value capture pivot". Maybe Barnes & Noblle should become a cheap book reader/tablet company. Might be a better future than operating book stores.
March looks like it will be a calm month after the hectic first two months of 2011. No speeches or workshops scheduled, no teaching courses at two universities (FIU and MIT) and just the usual 2-3 foreign trips. This comparatively slow schedule will allow me to return to finishing my second book. The book is tentatively titled "Social Entrepreneurship: Lessons Learned at One Laptop per Child".
I really enjoy the writing process. Nothing sharpens the thinking on a subject like writing a book. The part of writing a book I do not like is dealing with publishers. They are not bad people but I am not usually interested in the details they want to discuss. After the cover design is finalized I do not much care.
For my second book I am thinking of self-publishing an e-book on Amazon and pricing it at $9.99. Then I am going to blog and tweet like crazy and expand my current book website. Interest in social entrepreneruship is growing and except for some books on Muhammad Yunus and Grameen Bank there is little written on large social enterprise ventures.
So respected readers, what do you think of this strategy for my second book. Tell me in the comments or on FB.
I generally work on writing my books in spurts and Christmas/January is one of those periods each year. I hope to finish my second book by the end of January. This book deals with social entrepreneurship and lessons learned from One Laptop per Child. My first book dealt with business models in entrepreneurship (reminder: a great choice for Christmas gifts for your 100 closest friends). An odd thing happens to me whenever I am getting toward the end of a book--I come up with the idea for the next book. The remainder of this post deals with the concept of my third book.
For the last five years I have taught entrepreneurship at FIU and each year I try to improve the course. My efforts for improvement always focus on the beginning of the process and formulating the new business concept. I have become a dedicated student of creativity, innovation and design as a consequence of what is now a near obsession with better understanding innovation. Talking with a friend recently I realized that I was effectively trying to teach my students to be geniuses--probably too lofty a goal. However, in this quest I developed a way to help the students develop creative new business ideas. This approach is easy to understand and many students have tried to use the approach. This is in contrast to many other pedagogical devices to teach innovation which the students barely understood and never tried to use.
The method works equally well for problem solving and to develop innovative ideas. The simple method is called "relax the assumption". Identify the key constraint in a problem or product and relax it. For example, relax the key color assumption about Henry Ford's black Model T and several new businesses come to mind--custom colors, custom car painting, car accessories, maybe even garages. Another example: software applications resident on PCs. Relax the assumption about the app resident on the computer and you might get cloud computing, software-as-a-service, video distribution, browser-based applications, etc. In my experience the harder the problem the better this technique works. I also have some examples of this approach used by famous entrepreneurs.
Now this idea may appear so simple that you wonder how I could write a book about it. First I write short books :) Second there are some great thinkers whose ideas I put together to arrive at this simple method. Working at OLPC also helped with the evolution of this technique. Those MIT people inspire one.
A previous post on a related subject is here. Comments welcome.
Many thanks to Michelle Joubert for her help to promote my book. The excerpt from the current edition of FIU BizNews is below.
Eugenio Pino and Family Global Entrepreneurship Center
Robert Hacker, a member of the Pino Center advisory board who also teaches workshops for the center—most recently “Developing a Killer Business Plan”—has published his first book, Billion Dollar Company: An entrepreneur’s guide to business models for high growth companies. The book draws on stories from his success in building a billion dollar company in Indonesia and his 35-year career working internationally.
The book website is here and the link to Amazon is here.
I have been promoting my book, Billion Dollar Company, for about a month now. I have received a lot of emails from people about the book and the ideas presented. Three themes in the emails point out ideas that I probably should have emphasized more strongly in the book.
The emphasis on the different techniques to understand the customer need (Zaltman, Nintendo, abundance/scarcity) prompted existing business owners to go back and re-examine their business. I probably should have made the point more strongly that understanding customer need is an ongpoing process.
Defining the key assumptions in the business model is a very effective technique for building concensus in the management team on the expectations for the business performance.
Thinking systematically about pricing and distribution strategy in the business model is a mini innovation engine that has given people new alternatives for how to differentiate their businesses.
Thanks to everybody who has written me, tweeted about the book or shared posts on Facebook. I would like to ask for some more reviews on Amazon but those will come.
"Realizing it had taken a wrong turn, SlideShare rethought its approach to premium accounts and ultimately performed what we’d call a "value capture pivot", one where the company changes the way it collects revenue from customers."
If you do not know what a "value capture pivot" is it is a change in "pricing models". As described in my new book, Billion Dollar Company , there are 15 different pricing models. I guess in Ries speak that would mean you could pivot fifteen times.
Having had a little fun, I would now like to discuss "value capture" and its sister concept "value creation". The two concepts are popular in academic discussions of entrepreneurship and competitive advantage and were perhaps first introduced by Bowman and Ambrosini in their 2002 article Value Creation Versus Value Capture: Towards a Coherent Definition of Value in Strategy.
(Note to Colleen: if this is not the first significant article please correct me in the comment section.)
Value creation is the notion that every organization creates social utility. In economic terms, utility is a measure of relative satisfaction. In Hacker speak value creation is "satisfying customer need". Value capture is easier to understand. It is the monetization of value creation or as Ries says "the company... collects revenue from customers". In Hacker speak it is the "pricing strategy".
So far all of this discussion of value looks overly complicated, which is why I translated it into Hacker speak. However, this conceptual framework has an interesting application in understanding where different types of organizations place their emphasis. Let's say that emphasis can be determined at three levels--"ignore", "satisfice" and maximize. In the chart below I show different types of organizations and how much emphasis they place on value creation and value capture. (Click to see full image.)
As shown, a social entrepreneurship organization maximizes value creation (does the most good possible) and satisfices for value capture (a break even cash flow to stay operating). A for-profit company satisfices for value creation and maximizes for value capture. Yes--for-profits create social utility--but maximze cash flow to satisfy shareholders. The example I really like is the criminal organization--ignore value creation and maximze value capture. Of course, the for-profit that forsakes its social responsibilities (ignores) looks just like a criminal enterprise. Note: the shades of gray are where I am not sure. A government with a balanced budget may be satisficing for value capture and without a balanced budget they would be ignoring value capture. ( Note: I would appreciate comments on whether this way of looking at different organizations is helpful. I am thinking of using it in my next book.)
Just to clarify--I like Eric Ries' blog and his way of thinking about start ups very much and recommend it. Sometimes he just talks funny :)
My new book, Billion
Dollar Company: An Entrepreneur's guide to business models for high
growth companies, isavailableon Amazon. See the fourth strategy
Porter should have added, determine if the market
opportunity is large enough to interest venture capital and learn the
5-step process to really develop a business model. Book website.
Today I am officially launching the website for my new book, Billion Dollar Company: An entrepreneur's guide to business models for high growth companies. The site contains book reviews, videos and a lot more information about me. If you have never seen me speak there is a part of a video from the uVu WPBT2 archive. You can purchase the book on Amazon here.
Business models are like marketing, frequently mentioned but rarely understood. In my book I develop my way to define a business model--focusing on the five growth drivers in any business, the 15 alternatives for pricing and the role of sales and distribution. I also show how the business model assumptions make developing a financial plan quite easy. Much of the book is filled with practical advice and stories that illustrate the points, but this book is meant for practitioners and is not a disguised autobiography. I think it could be used to spice up an entrepreneurship or finance class at the undergraduate or MBA level and it is going to be used at the MIT Sloan School of Management this fall.
I will be launching a blog for Billion Dollar Company soon to promote the book, which will focus exclusively on business models. In the mean time I would ask that readers feel free to tweet and post about the book on Facebook and other sites. After you have read the book you might want to write a review on Amazon (here).
Two people were especially helpful in this book project. Colleen Post read an early draft and was very helpful in identifying the missing pieces of logic in the narrative. Gary Lattke of Ideatomica designed the website. In addition to a good sense of design and art, Gary is the best listener of any artistic type I have worked with. Jeff Stamp also did a great video book review, but he always does great videos.
I have said many times here that computing is moving to specialized devices, such as the Garmin GPS, the iPod and the Kindle. The iPad may be another example, serving the "Internet for Dummies" market or more politely people that want to use their computers basically for Internet, music, watching video and chat. The iPad offers a book reader but the further development of this feature (application) will not likely drive the sale of iPads. Therefore, I do not see the iPad book reader evolving much and therein lies the future opportunity for the Kindle and other book readers.
Books have evolved little since the time of the invention of the printing press by Gutenberg. Much as computing has spurred innovation in education, e-books have many opportunities for enhanced features. An example of this opportunity is demonstrated by the Kno, which is an e-book reader targeting the text book market. I expect that the Kindle will continue to add new features based on its wireless connectivity to provide additional reference sources beyond a dictionary and links to Wikipedia. Recently the Kindle added a new sharing feature and I hope that soon I can save excerpts of books to Evernote. When the Kindle starts to propose other articles, books or lectures on the subject of a paragraph based on semantic search, we will be closer to where I see e-book readers going.
The following statistics from Amazon show the robustness of the e-book market, which bodes well for the further evolution of the feature set in the Kindle and other book readers.
You will notice in the data above that my new book, Billion Dollar Company, has not yet sold 500,000 copies as an e-book. The simple reason must be that it is not yet available on the Kindle. If you click through to the Amazon link, read the book review and please click on the button to ask the publisher for a Kindle version. A complete website for the book will be available next week and will be announced here.
Many people say that successful blogs stay on subject. Long time readers of SF will know that I cannot abide this rule. I often post on academic papers that interest me and other somewhat eclectic subjects. A recent example would be the post on George Polya. Much to my surprise this off topic post has brought hundreds of people to my blog through Google searches. If you would like to learn more about the ever popular George Polya, who has to be one of the funniest great thinkers in history, read Gerald L. Alexanderson's The Random Walks of George Polya.
(Polya is credited with first using the term "random walk", a popular concept in finance and statistics.)
If you care to understand why I read and write about mathematics and mathematicians, let me explain.
All finance is now basically derivatives; derivatives are all about statistics and math
Strategy is not understood until it is reduced to numbers (Lord Kelvin and Hacker)
Technology starts with basic science, which is again almost all mathematics today
Last eclectic topic for today, again off point. If someone is looking for an interesting Ph.D thesis I think it would a fascinating and valuable study to show the inter-relationships between the thinking of Polya, Piaget and Papert. Seymour Papert was a renown MIT professor who combined the teachings of both Polya and Piaget to define a new concept of education for children using computers. (These concepts are the educational foundation for OLPC.) The thesis might be suitable for artificial intelligence, psychology, education, computer science or maybe even philosophy students.
Robert Tuchman is the founder of a successful sports marketing company, TSE, that was acquired by a private equity firm. He is also a columnist for Entrepreneur magazine, a writer for a series on ESPN and the author of Young Guns. I will be reviewing Young Guns, Robert's new guide to becoming an entrepreneur, in an upcoming post. Robert's guest post follows.
The decision to change my life and my
career path gave me much more to work with than I realized at the time. It gave
me a personal stake in a life built around doing something that I loved doing.
And it made all the difference. Suddenly, I was building something for me.
Something big. Out of this came my tenacity for studying sports marketing which
eventually helped me create my own company. However, as determined as I was in
the process. It just is not enough these days, you have to have detailed
knowledge of the company you want to build, imagine it succeeding, take charge
of your idea, and be confident that it will succeed.
My love and passion for sports as well as my knowledge of the business world
helped me continue to see a future in the company I was building, and now I
still see the ongoing success we have today. Determination is very important in
succeeding as an entrepreneur, but today with technology the way it is and new
businesses popping up each day, it is just not enough. You have to have the
knowledge, a set plan, goals, as well as outlets and other people to advise you
along the way.
If you love something invest time in it each day, look at all the possibilities
and make it work for you. Take one task on every day and let it be the building
blocks for laying a foundation for your company. Make your goals measurable,
don’t expect to always
accomplish big goals in a small amount of time; take on as much as you can,
when you can. Also make sure
the environment you are working in is comfortable for you, and that support your
goals. Mine was the sports packaging idea, I was comfortable, confident, and
knew that I had struck on something big and that it was going to connect me to
the world of sports, which I loved.
I was excited to see where it would go because I knew it was positively right
for me. This is the question you need to ask yourself, what’s right for me? So while being
determined continue to do, and invest time in what you love, because if you don’t wake up ready everyday to make your
business succeed, you will just sit back and watch it falter; don’t let that happen to your dream.
If you would like to submit a guest post on Sophisticated Finance, contact me.
