Monday, July 23, 2007

Mental Broadband

I really like good metaphors. Here is one from Tom Haskins comparing our minds to laptops and the internet, where our conscious mind is the laptop and the 24/7 internet is our unconscious mind.

Most conscious minds rarely access the unconscious mind for solutions, inspirations, and intuitions. They are like laptops that search their hard drive, but do not go online to search the Web. The unconscious mind can guide us into perfect timing so we are in the right place with the right idea in mind to make the right difference. If we ask, we can receive what we need to know, learn what we need to do next and change what we need to upgrade.

Very thought provoking. Many people in business only ever access their own hard drive. Entrepreneurs and innovators strive to get to this level of thinking, but struggle in getting there. Tom provides some ideas in his post on knowing when to access, but to me the hard part is knowing how to form the question to run the correct search? First, I believe it is about finding your creative place. Second, you need to surround yourself with others at work or outside of work who are also trying to get to this level of consciousness or are possibly already there. Third - give it some time to process. The unconscious is vast, and it will take time to draw some conclusions.

Sunday, July 22, 2007

Innovation at the Intersection

I have referred to the Medici Effect in a couple recent posts (here and here), and figured I should post a review/summary of the book. The term Medici comes from a banking family by that name in 15 century Florence Italy. This family and a few others began to sponsor creators from a vast array of fields, which caused people with wildly different skills to come to Florence. Their they found each other, learned from each other and broke down barriers between disciplines and cultures. Together they created a new world based on ideas generated, which became known as the Renaissance.

The author Frans Johansson, does an excellent job looking at intersection innovation and how it can be applied to todays innovators. For me the difference between a good book and a great book is how much it keeps me thinking after I put it down. This was one of those books. I kept a notebook with me as the concepts actually caused me to think about things differently generated new ideas on concepts I have been mulling around in my head.

Everything is connected in one way or another. The trick is seeing how these things connect and how to use it. It actually goes against the grain suggesting specialization in a given field is not the best way to produced breakthrough innovation. Field specialization will produce directional innovation. In many fields directional innovation is drying up. All the relevant variables have been combined. We actually have a great chance of achieving ground breaking innovating by not specializing in just a single field of study/work.

If you have two different fields (A, B) and each field has a number of variables to play with your innovation potential in each field is

Innovation potential of A= x1*x2*x3*xn
Innovation potential of B= y1*y2*y3*yn

If you take two different fields of study and combine all the possible variables, your innovation potential has grown dramatically. You now have A*B possible combinations many of which have likely never even been thought about together.

Its not that you can just know a little about many fields - you still need to have some level of depth, but the key is applying concepts from one field to another, and then another etc. How do you do this? Well the book has many suggestions, but one simple way is to begin exposing yourself to different industries. Possibly take a job in a new field, or minimally just studying across different fields and begin to draw parallels with your current specialty areas.

Once change you will see on this blog going forward is that I will begin injecting books into my reading list that will hopefully expose me to other ways of thinking, learning and fields with which I have less knowledge, even though it will likely have nothing to do with my current job or expertise. My current reading list will start to contain titles that don't typically blend with my standard business titles.

In the meantime, if you are looking to find new ways of stretching your thinking, pick this book up and read it. I guarantee it will spawn some creative thinking.

Sunday, July 08, 2007

Failure and Innovation

Failure in most companies is a bad word. Some more innovative companies have leaned that failure is part of innovation, but most of what people hear is fail quickly or don't repeat the same mistake which are both good things to keep in mind, but not the whole story. Entrepreneurs are acutely aware of the concept of failure, and it is often equivalent to a badge of honor in the startup community. What else should an innovator (company or person) keep in mind with respect to failures?

Frans Johansson in the Medici Effect says that mistakes and false starts are part of the process for making ideas happen in unknown spaces, and must be factored into the equation in three ways:

Try ideas that fail to find ideas that won't
So how do you create that type of environment?

  • Its not just enough to be accepting of failure, but output whether generating success or failure should be rewarded.
  • Failure to execute ideas is the greatest failure, and be punished
  • Be suspicious of low failure rates. Maybe not enough risk is being taken or people are hiding mistakes
  • Hire people who have made intelligent failures, and let others know about it
Reserve resources for trial and error
One thing to note about innovations in new directions are that many assumptions you make during development of the idea will be wrong. This is the primary reason why many internet startup companies in the late 90's failed. They thought they were going to get it right the first time. You need to keep an agile mindset in your team and company.
  • Be prepared to change your plan of execution
  • Give yourself the time for several attempts
  • Spend your money carefully and try and keep reserves for more than one try
  • Be extremely careful if your reputation or goodwill is riding on success the first try
Remain motivated
Probably the most important, but you must find ways to keep motivation high. Essentially you need to build passion in your business.
  • If intrinsic motivation is high, and we are passionate about what we are doing, creativity will be free flowing
  • People who are driven to perform do so based on internal drive - not external incentives. They want to do a good job.
  • People in new innovation spaces must believe that they will get the reward they deserve for their efforts, even though at the start no one really knows what the reward will be.
Clearly it is important in new innovation spaces that failure is expected, but if you are in this space, make sure it goes deeper than that. It must be supported with the appropriate culture and incentives, allong with appropriate expectations, planning, resources to have many 'do-overs' in order to find the right solution.

Friday, July 06, 2007

Using 'Free' To Grow Your Business

There is a series of posts on techdirt (see list at the end of the linked article) that have culminated with a summary article about using the concept of free to grow your business.

The article raise two important points regarding the use of free in your business model. The first is that if done correctly, you can increase your market size greatly. The second is that if you don't, someone else will do it correctly, and your existing business model will be in serious trouble.

The author defines 4 steps that in theory can be applied to any market with respect to the economics of free. (The author admits that some markets might be more challenging than others)

  1. Redefine your market based on the benefits.
  2. Break the benefits down into scarce and infinite components.
  3. Set the infinite components free, syndicate them, make them easy to get - all to increase the value of the scarce components.
  4. Charge for the scarce components that are tied to the infinite components.
This sounds very straightforward, and I suggest you try it against your market or any market you have some familiarity with. I tried this with a few different markets and it was much more difficult than you might think. Probably the most difficult part for me was breaking down the benefits into infinite and scarce. In markets where the product is related to content, the concept of infinite is much easier to define.

For this post, I chose to try the post-secondary education market through this lens: (feel free to disagree or add on)
  1. Redefine the market: The benefit is innovation potential
  2. Break the benefits down: Infinite - course content, research results;Scarce - Field experts, facilities/equipment, thought diversity, idea diversity, degrees/certifications, talent pool
  3. Set the infinite components free: Make research results publicly available to companies and possible users of the research, (but track who is looking at it). Make all course information materials, book lists etc available online. Include sample or all video lectures. This supports the redefined market/benefits.
  4. Charge for the scarce components: Access to professors becomes more valuable, getting the certification and the schools reputation become more important, people who are serious about education will see higher value in that others who are there are serious about learning (while still allowing anyone with internet access to learn and see what the institution has to offer), getting the university to partner with a business to do R&D work (sponsorship).
Yes, I am sure you can shoot holes through the above idea or possibly have other ideas to make it better, but the point is to think about your business in a different light. The economics of free isn't just about giving away your product for free, but being smart about what can be given away and still be used to grow your business.

Monday, July 02, 2007

The Internet Technology Dip

I just finished listening to The Dip by Seth Godin. A short and too-the-point read. It got me thinking about the technology dip that occurs with internet startups. This dip used to be very deep, and difficult to push through.

Tools and hardware were expensive, proprietary, and had very low interoperability. You had to have people with very speicalized skills in house to operate it. Now, tools have become democratized, they are cheap or free with the open source movement, there are many available API's and expertise can be found easily often in the form of online communities. Also, you can typically procure enough hardware to with a very low budget to get any project to market. The technology dip has been flattened.

This shows up of course in the market, with the explosion of startups that have anywhere from a small technical component to those focused solely on technology. Now basically anyone with half an idea and access to basic development skills (even self taught) can attempt to enter the market with an internet based product. The dip has been drastically flattened and easily passable producing many half-baked and me-too products. The barrier to quitting at least on the technology front has been drastically reduced.

As an internet startup, if you are planning on using technology to differentiate, you need to understand this change. If you want to be exceptional, you have to move to the next technology dip or dig new deeper technology dips to rise above the crowd. No longer can you throw together a basic e-commerce sight, social networking site, bookmarking tool, or video sharing site and call yourself an exceptional, stand out from the crowd business. Any good VC/angel will see through this as well.

Basic web apps become commodities extremely fast. You need to take your technology to the next level of intelligence creating or entering the next generation dip that your average weekend web programmer will not be able to climb out of forcing them to quit. You need to take existing tools and combine/evolve them into truly value added products that support a need that people are willing to pay for. How can you make your application smarter than every other offering out there? How can you create new innovation by combining business needs with technology?