Author Archives: hippotential

Experimental Failure Leads to Success

We’ve all heard the Thomas Edison quote that he “successfully discovered 1000 ways to not make a light bulb.” He didn’t consider the 1000 attempts as failures, but rather experiments from which he collected data that guided the innovative process. Who else lays claim to so many failures? Cisco grew to be one of the largest technology companies in the world after being rejected for funding by 76 venture capital firms. Michael Jordan, in the minds of many (including yours truly) the greatest basketball player of all time, was cut from his high school basketball team. John Grisham, award winning novelist, was rejected by a couple dozen  publishers before getting his first sizable deal. Slumdog Millionaire won 8 Academy Awards after Warner Brothers gave up on it and sold the property to Fox Searchlight. In short, each of these is a story about finding a positive way to apply lessons learned.

Why is it that workers go from being starry eyed, curious and energetic to automatons after working for a company for an extended period of time? Usually, by the time these numbed brains “check out” mentally, they have already been promoted to a managerial level. We value visionary leaders, but all disdain lethargic managers. What’s the difference between the two? The loss of intellectual creativity and desire to take risks leads to bureaucracy. The market demands innovation. Those who will lead are challenged to not become shut off to progress and new ideas.

Paul Arden wrote It’s Not How Good You Are, It’s How Good You Want To Be. The former executive creative director of Saatchi & Sattchi said, people “will say nice things rather than be too critical. Also, we tend to edit out the bad so that we hear only what we want to hear…If, instead of seeking approval, you ask, ‘What’s wrong with it? How can I make it better?’ You are more likely to get a truthful, critical answer.”

Jeremy Gutsche concurs with Arden, writing that “a culture that openly discusses imperfection is more likely to accept the failure that comes from acceptable risk.”

Michael Jordan, mentioned above as the greatest basketball player in history, said the following about taking risks, 

“I’ve missed more than 9,000 shots in my career. I’ve lost almost 300 games. 26 ti,es I’ve been trusted to take the game winning shot and missed. I’ve failed over and over and over again in my life and that is why I succeed.” 

Most companies, however, spend a lot of time in performance appraisals celebrating successful outcomes and critiquing efforts that don’t appear to meet expectations. Think for a minute, however, about how to inspire your employees to be clever and progressive. Put measures in place to help them feel protected. It must be understood that trying new things, even if failure is the outcome, is a better business decision than undertaking safe projects constantly.

It is said that Steven Ross would fire employees for not making mistakes when Warner was launching its MTV subsidiary. He and his leadership team were trying to debut new programming and needed as much innovation as possible. Similarly, Microsoft used to have the mentality that a leader was not ready for promotion if he had not had a highly publicized, big flop. Thomas Watson, Sr., founder of IBM, once received a phone call from an employee who wanted to resign after making a $10 million mistake. Watson refused to let him follow through with his intended action, telling the manager that IBM had just spent $10 million educating him.

How much money and time are you willing to spend in your organization to educate people and give them the chance to pioneer something great? Probably not enough. 

Don’t Make a Monkey Out of Innovation

 

 

The story is told of five monkeys who were a part of an experiment studying group theory. Inside the cage wherein they were placed, a ladder led to a bunch of tantalizing bananas. What the test subjects initially did not know was that a high-pressure water hose was attached to the ladder.

One eager monkey raced up the ladder, reaching for one of the tasty bananas, only to cause the entire cage to be deluged with water. Undeterred, another monkey made her own attempt to reach the top. When she ascended the ladder, all the monkeys were again treated to a downpour. The lesson began to sink in–if any one of us tries to reach for the banana bunch, we are all going to get soaked, and that is unpleasant.

As the original test group was substituted out for individual newcomers, one by one the new arrival would make an effort to scale the ladder for the tasty treat. However, the existing group, fearing the dousing, would beat the newcomer down before he could make it to the top. The cycle was repeated, with the same result, until all the original monkeys had been replaced.

When the water hose was removed, it didn’t affect the curiosity of the monkeys–they had learned to avoid the bananas.

In most organizations, there is a built-in resistance to trying new things–particularly if hard lessons had been learned that discourage innovation. It is as though the expectation of risk bringing failure or reprimand begins to thwart spontaneity and creativity, until “group think” has overtaken individual expression. As you think about your own organization, to what degree does this thought process embed itself in your company culture?

Organizations who want to improve their organizational culture need to go to work on the four dynamics above. Perspective, defined as the way we look at the future and the problems we are trying to solve, determines destiny. If it is one’s approach to always be logical, for instance, that is a matter of perspective–not necessarily a reality for all player’s in a niche market. Lou Gerstner, in speaking about his turnaround of IBM, said, “I came to see in my time at IBM that culture isn’t just one aspect of the game–it is the game.” Some of the changes he made seemed like semantics, but his commitment to them made a huge difference:

  • Shift the focus from product to customer
  • Shift from “value me” (silo) to “value us” (the whole)
  • Shift from analysis paralysis to making decisions with 80% knowledge and moving forward

Experimental failure means creating a safe environment in which ideas can be tested and allowed to fail without the idea person being labeled a failure. Instead of making minor adjustments to what exists today, we need to foster an attitude that looks for tomorrow’s breakthroughs. Often, complacency is the doom of a department, division, or business. It has been said that we grow most in the valleys. If you are a part of an organization that only wants to play “king of the hill” through entrenchment, you should look for your next opportunity today!

Disruptive innovation begins with a deep understanding of the needs of your target audience. Customer obsession is an intentional effort to connect and engage..especially on an emotional level. When the connection is made, your product or service resonates with the customer in such a way that she cannot imagine a world without your offering as a part of her life.

Breaking down worn-out structures and processes that hinder our vision of market dynamics allows us to adapt effectively. Intentional destruction challenges the assumption that a strong titular leader makes an organization high-performing. Instead, ideology becomes the unifying factor. Empowered employees can react more quickly and build greater team capabilities that those languishing under an unwieldy reporting structure.

As you look at these recommended area to improve your organizational culture (thanks, by the way, to Jeremy Gutsche, again, for articulating many of these ideas in his writings), determine one thing you can obtain buy-in to change this week and do it!

 

 

Relevance in Business is Fleeting

“Focus Not on Protecting What You Have, Instead Obsess on the Next Big Thing.”

While this type of headline may not serve us very well in interpersonal relationships, it has become the watchword in business. Those who rest on yesterday’s accomplishments eventually find themselves with less and less current successes. Since we live in a day and time when ideas are ubiquitous, information plentiful, and communications vastly enhanced, it is incumbent upon every enterprise to remain on the hunt for “wow.”

Jeremy Gutsche of Trendhunter wrote in Exploiting Chaos that the disk drive, computer chip, and word processing markets were all ones that saw enormous changes and the market leaders were often outflanked. Read on:

Borrowing from Clay Christensen’s work in The Innovator’s Dilemma , Gutsche described the progression in the disk drive industry towards constantly smaller drives. Along the way, observe the shift in power:

 

Observe how great organizations present in 1980 gave way to more nimble upstart startups over 15 years. Though the only apparent change was size of the drive, it was enough innovation occurring at a rapid enough rate to trip up the “big boys.” Perhaps, one may suggest, disk drives had become commoditized as more PCs were manufactured? This theory seems to hold true in computer chips, then, as well. To note:

Observe that this market experienced a slower rate of change (40 years of upheaval vs. 15), but the net result was the same: market leaders gave up leadership to disruptive alternatives. The fact that semiconductors require very extensive research and development efforts, whose project funding ranged into the billions of dollars, made this a significant economic microtrend. Gutsche points out that RCA was once twice the size of IBM, so the thought process that monetary barriers to entry would protect industry leaders was disproved time and again.

Word processing was once known as typewriting and the market leader was Smith Corona. Smith Corona was extraordinarily innovative, boasting over 100 patents spread over decades. Yet, the company who also invented the first word processor did not continue to reinvent itself in the computing age and lost its market leadership role. It is suggested that the historical accomplishments became blinders to the urgency for continuous improvement. Notice, they understood the concept of reinvention, but underestimated the urgency factor.

Lest you think that Smith Corona had been mismanaged over the course of the 20th century, pay attention to the fact that their annual revenues in 1989 were $500 million! What happened? Let’s look at some of the competition and what strategic decisions they made…Remington recognized the opportunity of computers and made the leap in 1950, only to be too early to that niche, lose money, and the computing division sold off in 1981. Perhaps Smith Corona saw the foibles of a competitor and vowed not to make the same mistake?

Commodore, on the other hand, was a different kind of competitor. Their model 128 was introduced in 1985 with two external floppy drives. The Smith Corona PWP 40 was preferred by buyers by a wide margin for word processing applications. Yet, someone inside the company saw an opportunity to partner with Acer on a computer joint venture. Unfortunately, the plug was pulled before the strategy could run its course.  Smith Corona declared bankruptcy in 1995; Acer became the fourth-largest PC company in the world!

Scott Anthony, writing for Harvard Business Review in an article entitled “Disruption is a Moving Target” observed a clear pattern:

  1. Disruptors enter a market incumbents don’t care about.
  2. Entrants grow as incumbents flee.
  3. The incumbent hits a ceiling.

What should be learned from this insight? Larger companies should not ignore small opportunities simply because they start out small. Smaller companies should plan their strategy and tactics around “nibbling at the edges” of an incumbent’s market share.

 

 

Are You as Tuned In as Zipcar?

Recently, I had the opportunity to teach a group of new entrepreneurs (some not yet in business, some with a year under their belts) how to evaluate a business idea. We discussed the fact that, in the ideation process, there must be a filter by which ideas are judged and refined. Just as heating up gold purges the dross, an idea put under scrutiny can be seen for what is truly valuable, versus the parts of it that need to be cast aside to pursue more pure substance. During one of our sessions on idea refinement at the Cary Innovation Center, we spoke about innovators who had gone before them in various fields. One of the intriguing business models we bantered about was the Zipcar.

Zipcar entered my field of vision about three years ago when I went back to school to get my MBA at the #1 part-time program in the United States, Elon University. Situated near the student stores, and within a stone’s throw of the library and dining hall were a row of cars with the Zipcar logo emblazened on the side. There were assigned spaces closest to the buildings and I wondered what this was all about. A couple months later, we studied Zipcar briefly in an innovation elective class I was taking.

Later still, I read Tuned In and the upstart car rental business showed up again. Robin Chase and Antje Danielson recognized the opportunity while vacationing in Berlin and seeing a similar concept. When they returned to the States, they asked around and realized that there was latent demand for a rental car that would fit an urban lifestyle–creating a submarket for those who only wanted a car for a day, a weekend, or a few hours. The identified a target market of people who didn’t want the hassle of owning a car nor the inconvenience of dealing with the traditional rental car companies.

The authors of the book describe a six step process to create an offering that is a “resonator:”

  1. Find unresolved problems.
  2. Understand buyer personas.
  3. Quantify the impact.
  4. Create Breakthrough Experiences.
  5. Articulate Powerful Ideas.
  6. Establish Authentic Connections.

Without going into a ton of deal, suffice it to say that Chase and Danielson did all six with Zipcar. Of the six, the one I spent the most time discussing with my class of entrepreneurs was “Understand Buyer Personas.”  Basically, this is the concept of characterizing a group of people who share one or more challenges. When a company zeroes in on the concept, they use these personas to drive decisions in product design and development, marketing, and communications. Rather than the mass-produced single item method of the industrial revolution, this approach aims for customization to individual target audiences, the sum of which makes for a good business model.

Zipcar, according to the authors of Tuned In, appeals to the following types of buyers–

  • City dwellers who occasionally need to use a car for a few hours,
  • Mayors, city councilors, and police who deal with parking constraints in major cities, 
  • University administrators who wish to set up a car share service for students,
  • University students who occasionally need a car for a few hours, 
  • Landlords who might offer a car share service as a benefit for tenants, and
  • Business managers who might want to set up a car share service as a perk for employees.

As we discussed this profound market segmentation, my pupils (students) were really challenged to think through their own competitive positioning efforts. Even the mentors I had in the room (present company included) had a bit of a gut check as to how well we did this in our own businesses. How about you? Have you taken the time to really think through this in a way that many small business owners never do–at startup or later?

 

Dirty Martini Intrapreneurship

One  of the portals I use to stay abreast of innovation is called Alltop. It is organized by author and an author by the name of Gregg Fraley caught my attention last week. Gregg had written an article entitled, “Do You Want Innovation or a Dirty Martini.” Rather than describe the whole article for you (or violate his copyright), I offer you the following excerpt:

note: Haley references the topic of management engagement in innovation and some “interesting posts lately byPaul Hobcraft”

I think many high level executives simply don’t know what they have. Until it’s too late.

There are a lot of smart people out there, with great ideas. Talent is something you need if you really want to innovate. And yet, really, most organizations already have that talent. No, not every employee is Jony Ives and is an impact player at that level, but nearly every company has some people that, under the right circumstances, can hit home runs (score goals, set records, win gold, etc.). Ives himself was locked in a closet before Steve Jobs found the key.

In my travels doing talks and such I often have a chance to chat with line workers and middle managers who are beyond frustrated. They have ideas, they have energy, they care about the company — and none of that goodness is being channeled towards innovation. In fact, it’s being actively suppressed in some cases.

The phenomenon that Haley describes is one in which many organizations, even reading about Google or Cisco, who both encourage creativity and innovation, are faltering. Their people are full of great potential that largely goes untapped because there is not a means to commercialize new ideas (or even pursue new methods) because management is not intentional about cultivating input from others–especially those outside the management side of the building. Haley goes on to argue that even those with creative talent, who are often recruited to organizations that need the proverbial “breath of fresh air,” find that their approach is not valued and they begin looking for their next opportunity too soon after joining an organization that so desperately needs them but is not accommodating to them.

He says, “C-suite types, hear this, if you knew  how much talent is wasting away right under your nose, you’d cry in your martini. Don’t believe it? Ask. Ask a sampling of your people the simple question — where are the hidden gems around here? You’ll find out things you didn’t know. People with secret projects, big ideas they’ve been holding back, crazy ideas that just might work…Want to turn the situation around? Ask another question — what’s holding you back?”

I would add to the questions he asks the following:

What are you doing to foster a culture of innovation?

Here are some suggestions–

  1. Change the way you form work teams. Build diversity of thought into as many teams as possible.
  2. Change your own role from decision maker to facilitator. See yourself as primarily responsible to help others shine and succeed.
  3. Create a knowledge management system that captures lessons learned and best practices to be disseminated broadly and consistently.
  4. Celebrate when an employee takes initiative. Find ways to acknowledge them openly.
  5. Get rid of the traditional research and development process. Instead of a department, create an inter-departmental group that represents not just different disciplines, but also different levels of experience and different demographics.

Intrapreneurship is on the rise among savvy competitors. It does not, however,  come without a price–ego has to be checked at the door and individuals valued for their unique contributions.  Your challenge is to retain creative talent that otherwise would start their own businesses or work for more progressive competitors!