Entrepreneurship & Money

If you are a regular reader, you may have noticed my posts have dropped off recently. This has a strong correlation to the birth of my second son! - Noah Patrick was born on July 9th 2007. (pictured here with me and my other son Hunter) For anyone with kids I am sure that says it all regarding free time, however once things settle a bit, I expect to get back into a more regular routine. Its not just about getting posts out - for me its about training my mind to think, and focus on different ways of doing things. This blog is my tool to do that.

Given that I thought I would share a couple of thoughts on entrepreneurship that came out in some discussions with two friends/mentors of mine on the topic of money recently. (paraphrased)

1. A regular job is about working hard to make money. Being an entrepreneur is about making your money work for you.
2. Entrepreneurship is a game. The goal is to stay challenged and have fun. Money is just a good way to keep score.

Here's to getting a full nights rest sometime soon!

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.

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.

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.

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.

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?

The Intersection of Business and Technology

At the intersection of business and technology, people often get very excited or tense, optimistic or worried, challenged (in a good way) or frustrated. Frans Johansson in The Medici Effect talks about intersection innovation - a place where two fields collide and divert along a new innovative path. The collision between business and technology has been a slow moving one over a very long period of time, but companies, are starting to realize, what many or most entrepreneurs already know - the endless number of new paths that can be taken when you start looking at these two areas together instead of separately. We are now at a point where one field can rarely exist for any length of time without the other.

John Hagel has now joined Deloitte & Touche USA LLP and will be heading up a new research center to focus on the business issues created at this intersection.

He poses a number of intriguing questions around this topic of business/technology interesection here with some thought provoking commentary that is worth a look by any reader interested in the topic of this blog.

Foundational

• What if there is no equilibrium?
• Can the firm survive as the action flows to the edges?
• Are all ecosystems created equal?
• If the world is so flat, why are spikes becoming more prominent?

Strategy

• Is adaptation all there is?
• Can we escape the Red Queen effect?
• As “L curves” replace “Bell curves”, what are the most promising routes to the head?
• We have a growing realization that stocks of knowledge are diminishing in value relative to flows of knowledge, but what is required for effective participation in the highest value flows of knowledge?
• What are the opportunities for the bottom of the pyramid to attack the top?
• How do we measure success when so many of the rules are changing?

Technology

• When is self-organizing not enough?
• How are pull platforms likely to evolve?
• What is the next generation of IT architecture?

Being at this intersection is to me what makes these two fields interesting and exciting for some while scary and daunting to others. It is the combined knowledge of these two areas that is driving much of the disruptive innovation we see today in the new economy. Knowledge and innovating down one side without considering the other will not produced viable results that will be able to compete in the current and future marketplace.

New Economy Problems

In 1973 H. J. Rittel and M. M. Webber came up with the idea of the 'Wicked Problem' as it related to social planning. The original definition of a wicked problem included 10 components, however Jeff Conklin later proposed 4 defining elements to wicked problems in 2003:

1. The problem is not understood until after formulation of a solution.
2. Stakeholders have radically different world views and different frames for understanding the problem.
3. Constraints and resources to solve the problem change over time.
4. The problem is never solved.

Although the concept started with social planning, and now more and more applies to computer science problems, I think it is now expanding well into other part of business. As business becomes more complex, there are more wicked problems. As business and technology become more intertwined, there are more wicked problems. At Balihoo we are in the vertical search business. Search is a perfect example of a business-technology wicked problem.

How do these types of problems impact conventional thinking?

- Defining goals & expectations becomes a problem
- Defining tests or methods to validate results becomes a problem
- Decision by consensus becomes difficult
- Results are no longer correct or incorrect, but better or worse
- Project time-lines are difficult to define

In addition to driving your traditional project managers crazy, it generally disrupts the framework around how business's determine progress. However, it is something that everyone in the new economy will have to adjust to. What wicked problems do you have, and what is your approach to solving them?

Work Life Balance

This weekend I headed up after work on friday to the Sawtooth Mountains north of where I live with 3 others to climb a great route called the Chockstone couloir on a peak called Grand Mogul. It was a short trip, tiring but extremely satisfying, creating great memories. I get out as often as is feasible, but with a busy job, and a growing family its important to make your free time count.

Recently we have been having a lot of discussions about what our company values are and should be. Values are important no matter how big or small you are. Values create the guardrails by which you work, and make decisions, just like your personal values guide life decisions.

One of the values that many companies speak to and try to have is 'Work Life Balance'. I never really liked this term because of its ambiguity. It seems straight forward, but it isn't. Its the term balance that bothers me. Balance is in the eye of the beholder. What is balance to one person is imbalance to another. Balance implies evenness, but we all know that is never the case with any business in the new economy. Work effort volumes eb and flow like tides of the ocean, and just like weather patterns there are periods of calm as well as hurricanes. In my experience, I find that this term of 'Work Life Balance' is often a buzzword thrown in for appearances, with little thought to what it means, nor how different employees will perceive it. In the end most people are unhappy, because their perceptions of what it means is different from everyone else's.

We wanted something in the same vein as WLB inside our company, battering around terminology such as work life control, and others. We eventually settled on 'Work Life Passion'. Not a huge departure, but subtle enough. The term passion might almost be considered more ambiguous than balance, but to us it says better what the culture of our company is and what we want it to be as it grows. People need to be passionate about their work inside the office and their pursuits outside the office, and strike a balance that makes sense for the company as well as for them. It in no way implies a perfect 50/50 split, and thats ok.

Stowe Boyd often talks about the concept of flow, and your time being a shared space. In the new economy that is often the case. The line between work and home blurs for most, but for most that is better, allowing for a more full life (ie - going to your daughters school play mid day) Also with his definition of flow, time is not constance - it moves faster or slower based on situation. Think about when people talk about being in the zone with sports and time almost slows down as the ball approaches. This flow time is what passion is all about.

Time across work and life is never balanced, but with passion and good use of the time you have allows you to create the balance that is right for you.

Enterprise 2.0

Enterprise 2.0 derives from Web 2.0, and refers to social software application that sit behind or are used behind the corporate firewall. Wikipedia has a good entry on the topic, and I just came across this slide deck about Enterprise 2.0 by Scott Gavin. It is very well done and told as a story, that may help you convey the concept in a more understandable way to peers in your organization. Have a look.

More True Than Ever Before

Flipping through some old notes came across this quote. Even with all of our technology, I feel this is more true than ever before. Probably even more so because of technology.

"A business is best considered as a network of conversations"

- Gregory Bateson
Steps to an Ecology of Mind (1972)

Photo Credit

Mapping Participation

A while back I saw a post on Forester about a new article on a topic they called Social Technographics. It peaked my interest and they were offering copies to bloggers, who wanted to review, so I sent in a request. Never heard anything so I went through another source and got the paper anyway, and here is my summary of the key concepts:)

I always find it funny how the think-tanks come up with new terms, register them and then tell everyone how they were the first to come up with the idea. This time its 'Social Technographics' which essentially means describing a population based on their level of participation. Companies are starting to realize that demographics don't mean what they used to especially when it comes to online usage and especially social software. You can no longer equate race, sex or age to social software engagement. Forester suggests that you need to create a social strategy based on how your users map into a set of profiles. They have identified 6 increasing levels of participation. (note - participation levels are not mutually exclusive)

1. Creators: online consumers who publish blogs, maintain web pages, or upload videos at least once a month.
2. Critics: participate by either commenting on blogs, or posting ratings and reviews. Their participation is not near as intense as creators. Critics pick and choose where they offer their thoughts, and often use blogs or other items as a launch pad for their participation.
3. Collectors: save URL's, use social bookmarking, tagging, and RSS. They create meta data that shared with the entire community and add to the self organization of web content.
4. Joiners: one defining behavior - use of social networking sites. Highly likely to engage in other social software activities.
5. Spectators: read blogs, view videos, and listen to podcasts. The audience for the social content created by users in the other groups.
6. Inactives: do not participate in social computing activities. They site this as 52 percent which jives well with this study.

These profiles of course do vary by age. For example teenagers generate more content than any other generation, and joiners are dominated by Gen-Y. However age is not the only way to slice the data. User motivation (entertainment, career, family etc) as well as site features, and brand appeal can all drive different participation profiles.

The key with this is to think about these it terms of your users/customers to define the right strategy with respect to deploying social software. Make sure you deploy what will best fit the participation levels of your audience. Once you understand your audience, Forester continues that you should:

• Map out how users will participate today and in the future
• Create multiple participation points (don't just give your audience one option to participate)
• Find lightweight ways for first time creators to contribute
• Make it easy for spectators to find user generated content
• Prepare your organization for participation (and criticism)

Overall, a decent article, I wouldn't say its worth the $280 for 12 pages of content, but if your organization has a contract with Forester its worth a read.

Look To The Inexeperience Curve

With business audio books an important point needs to really stand out and catch you, because before you know it the reader is on to the next segment. This concept stood out for me the other day while listening to Maverics at Work.

As a leader probably one of the most important things you can do is to walk in stupid every day. You need to keep challenging the organization and yourself to seek out unexpected ideas, outside influences, and new perspectives on old problems. Every day something changes. Look to the inexperience curve. The more you know about something, the more important it is to challenge assumptions and habits that built your success in that area. This will help you think in a new light and drive innovation in your organization.

(By the way - don't confuse leader with manager - they are not related. You don't have to manage people to be a leader in your organization.)

Self Organizing Content

I started looking into details of the Semantic Web about a year ago for a startup idea I was working on with a couple of friends. The concept on SW and the potential of it fascinates me. It is the web where data is stored in ways that machines can understand - not just humans. From Wikipedia:

Humans are capable of using the Web to carry out tasks such as finding the Finnish word for "car", to reserve a library book, or to search for the cheapest DVD and buy it. However, a computer cannot accomplish the same tasks without human direction because web pages are designed to be read by people, not machines. The semantic web is a vision of information that is understandable by computers, so that they can perform more of the tedium involved in finding, sharing and combining information on the web.

From a business perspective this offers massive potential for new waves of development and data analysis in new creative ways. (A good article by Business week on the topic) The interesting thing is that content on the web is already starting to self organize itself through tagging. Tagging doesn't just describe 'what' but many other aspects of the tagged object. This includes human associations that are key to understanding.

For example a take a picture of a cup on flickr which may be tagged with coffee, tea, both etc depending on different perspectives. The association between coffee and cup would not be obvious (especially to a machine!), but you can start to see with a world wide community of users tagging and creating associations, it starts to form the basis for content self-organization and association. This alone, does not create the semantic web, but begins to form the kernels in which to create one.

Tom Haskins refers to this concept in a different light, calling it reflection:

Those of us who search for, link to and tag digital content are practicing reflection...We are externalizing meaning. We are connecting our dots for others to consider how to connect their dots...We call it like we see it and that differs from everyone else. There are many right answers. There are thousands of ways to see it, frame it and use it. We have final say over our idiosyncratic consideration.

The next step beyond creating associations is to begin unearthing unknown or unlikely associations between concepts both inside and outside the walls of the organization. With the startup I was working on last year, part of what we were trying to do was have software help drive innovation, by 'understanding' disparate ideas created by people. By having software understand an idea, and then begin to draw associations between disparate ideas to create new streams of innovation.

Exciting times ahead, and we are all helping the web organize itself and realize the next evolution.

Do You Strive for Thought Leadership?

I am currently listening to Maverics at Work by William Taylor and Polly LaBarre. This morning, just before getting out of the truck, they summed up the first section with 5 questions that I thought would be useful to pass on. They are centered around the concept of thought leadership, and propose that the only true form of market leadership is thought leadership.

5 questions to ask yourself today:

1. Do you have a distinctive and disruptive sense of purpose?
2. Do you have a vocabulary of competition that is unique to your industry and compelling to both employees and customers? (an 'only spoken here' vocabulary)
3. Are you prepared to reject opportunities that offer short term benefits but distract from the long term goal?
4. Can you be provocative without creating a backlash? (within your own organization or from competition)
5. If your company went out of business tomorrow who would really miss you and why?

Take some time to think about these questions in your business, and you might rethink some of your current business practices to put yourself in a thought leader position.

Your Business as a Tribe

I have become much more interested in the social, cultural and behavioral impacts and changes deriving from web 2.0 and social software, much more than the technology itself. All those tools and features without any business model are reshaping our culture and the economy.

Stowe Boyd, one of the lead thinkers in this space gave a presentation at Reboot, about his concept on Flow. His presentation is available here. The clip is about 35 minutes long so take some time at your lunch and watch it.

Some of my key takeaways. This isn't by any means a summary of the talk but concepts that jumped out at me...

- First in first out processing works well at a supermarket, but not in an emergency room. We are now living in a world that is much more like an emergency room.
- We are actually moving to more of a pre-industrial/agricultural consciousness. More like that of a tribe.
- Today your time is a shared space, which conflicts with current business norms. Is what you are doing of greater benefit to you (or your boss) or does it benefit the tribe?
- The buddy list is the center of the universe. I am made greater by the sum of my connections & so are my connections.
- Productivity is second to connectivity. Network productivity trumps personal productivity

This type of thinking goes well beyond how, and what tool you should let in or look to utilize in your business to satisfy your customers, employees or give a boost to your search results or marketing campaign. Its about understanding how cultural norms are shifting and how you as a business will need to react. I like Stowe concept of the tribe, and although he used it in the context of your social network, I feel like this concept can be brought into an organizations, and supported by the right tools, will help support the productivity of the organizational tribe. The majority of companies are no longer living in a supermarket world (even if their business is supermarkets!). Business is now an emergency room.

Hierarchies Don't Work As Well As They Used To

Hierarchies are tools that can used to categorize information into groups with logical 'parent-child' relationships. You see them everywhere, but the issue with them is that they are only one person's or one companies opinion of how the world looks. Companies use them extensively to describe their organizational structure, their process models, their product inventories, and this works great when everyone in the organization can be trained to fall into line and talk the same language.

However your customer doesn't always think in the same way as you. Their hierarchy may be different or most likely they don't think about a hiearchy at all! Second, not only are their new categories popping up all the time, but the lines are blurring between many categories. What once fell neatly into a well defined bucket, can produce hours of debate with no right answer.

The concept of folksonomies has become popular with the rise of Web 2.0. Folksonomies are user generated taxonomies or structured use to categorize content typically with the use of tags and tagging. Most people are familiar with tagging, but companies don't often see how this could or should be applied within an organization. However its not an all or northing decision. For example, it would be chaotic to organize your inventory internally through employee or customer created folksonomies (for the purpose of warehousing, ordering etc), but at the same time, why force your customers to try and figure our your archaic structure when they are trying to find a product to purchase? Yes search can help but customer driven folksonomies will help even more AND if tapped can also help search.

The thing is that most people in business today grew up in a world of parent child hierarchies. It has been ingrained in the way we think. Putting things into strict classifications helped us feel in control, but with the pace of change today, structures are quickly outdated and become very painful to re-organize. In our business we constantly fight with trying to classify advertising mediums, (ways in which you could advertise a product). It use to be simple - print, radio, television, direct mail and a few others captures almost everything. The fragmentation in this space is mind boggling now. How do you accurately categorize a blue tooth text messaging cell phone campaign? Or what about a direct mail campain via email. Is it an online offering or direct mail? Well its both but more importantly, it depends on who's doing the searching.

Even stretch your mind to think about internal classification structures. Since I have a background in process engineering, I know that people love to define and map out strict process hierarchies and 'teach' the rest of the organization how the business operates. But could processes be organized into employee created folksonomies to some degree? Process ownership and accountability is still required so its not about letting everyone decide separately how the organization runs itself, but the issue comes when people are trying to 'find' the details of a given process. (maybe for a new software application implementation) Do I find the 'employee onboarding process' under HR, under operations, under IT? (well it actually touches all three and more). Accountabilities aside, if tagging was was available and used, there would probably be a lot of time and argument saved by not having to create a hierarchy that meets everyones view of the world. And most importantly, the person who really needs the information, can find it.

The key point with this is to think about who your customers are (whether internal or external) and what they are trying to do with your information. The easier they can find, store and categorize in their terms, the more likely they will use your information assets in the future. How you categorize and use the data is completely different than how they see or want to use the data. Don't make it your customers problem to understand your structure.

Ideas for the Newspaper Industry

A while ago, I posted about re-thinking the newspaper industry. Here are a couple of ideas I had around innovating in that space. I by no means have any background in this industry, but here goes. In my language customer is defined as a person who gathers utility from reading the contents of a newspaper.

Product Innovation: Allow readers to customize their content. This is not a new concept online. Personalized home pages, email alerts, RSS are all commonplace across the web, and if not already should be integrated into the online channel for the newspaper. This will not only help you better understand what your readers are interested, and allow for better targeted advertising, but will also make them better able to navigate the reams of content available.

Second, in the same vein - appreciate the fact that many of your users don't have an interest in online reading, however that doesn't mean that you should be able to provide them tailored content. Printing innovation is evolving rapidly. Why not allow a subscriber to tell you what they are interested in and have a customer newspaper printed for them based on these interests? Then urge them to go online and rate the content that was delivered so that future papers can further be tailored to their interests. (similar to what some companies are doing to tailor music streaming)

Beyond that I see digital newsstands that would allow a user to select from a menu, and have a custom paper printed off immediately on authentic newsprint (like a soda machine that spits out a newspaper). Plus advertising and print layout would be defined on the fly by software. Further - give people a plastic 'remember me' card, so that they can use with other electronic newsstands, of which get updated every time they make a change (similar to an ATM). Once this is attained - next step is partnering with other news organizations to share/combine content. (Give me the wall street journal combined with Boise local business in one paper!)

Business Model Innovation: Why not create a model where the price of the paper to the end customer varies based on how much advertising they are willing to accept. The more ads, the cheaper the paper becomes. It has been shown that people are willing to pay for advertising free niche content. Think pay-per-view or Sirius. This could initially be packages with varying levels of advertising along with various skews towards types of content (local, sports, business, etc) The content selection would then of course help associate related advertising.

Next combine the two ideas. Allow for infinite tailoring of content to what users need combined with business models that allow pricing to vary by customers interest or lack thereof for advertising, and have any advertising sent be targeted. Meet the long tail needs of your readership.

These may seem unrealistic (or maybe not), but in the end its about thinking on the edges. Most of what I talk about here requires technology and online interactions with consumers, but it doesn't rely solely on the online medium for content delivery.

Now when we get to a point where e-paper is almost as flexible as real paper (we are not that far off), that opens up entirely new opportunities.

Find Your "Creative Place"

Where and when do you do your best creative thinking? Have you ever thought about it? What type of surroundings put your mind in an open state? A friend once told me that he even had creative 'seasons'. He found that spring was his most creative time of the year. Ben McConnell gets bursts of creativity in the shower, and he attributes it to higher ceilings. For quite some time while I traveled for work, my idea flow was very high on airplanes. Now of course if I am stuck in a middle seat near the back this isn't going to be the case, but more often then not, I get off an airplane with a lot of interesting notes scribbled down based on whatever I happened to be reading about. In this case it can't be the high ceilings, but maybe its looking out the windows? I have even written poetry in airplanes at different points, and believe me I am no poet:)

I do believe that the concept of bigger spaces creating better idea flow has merit. The feeling of openness and freedom somehow transfers to thought patterns, making them less constrained. The next logical question is how to create work environments that will allow the idea flow to increase. Since this will be different to different people, much of this will be tapping into your own sensations of creativity and working with it yourself. In contrast with most places I have worked at in the past, my current office environment is very creative for me. It does have high ceilings buts its more a feeling than any ability to articulate why it works. In addition to the ceilings, I think it's the traditional building materials (exposed brick and wood, and steel) that are part of it in addition to the open atmosphere. In contrast, I find new age materials do not stimulate idea flow, even when working in space age pod like set ups I have seen companies try and pull off. Everything seems too manufactured, and it doesn't matter how high the ceiling is.

Additionally, I need some connection to the outdoors. An ability to look out a window, and connect with the biggest open space of all. This of course isn't always feasible but not all your creative thinking needs to be in a designated work space between 8 & 5. Experiment and find different creative places for you. My front porch (view shown in picture) for instance has become a good idea flow space for me (at least when the weather is good). Open air, birds, wind chimes - not sure what it is, but its not really about the how. If it works, be aware of it, and use it.

What works for you?

Social Software - More Than Technology

Came across a thought provoking essay by Danah Boyd about her take on the significance of Social Software. Its an intriguing read if you are interested in the significance of this concept beyond the tech aspects into more about how it is shaping and changing social behavior.

The article begins by giving an interesting history behind the concepts of social software/social computing and the various definitions. As is often the case, researchers and developers are unhappy with 'new' concepts and come out saying that 'they have always been there', however Danah makes a great point that Social software is about a movement, not simply a category of technologies. The author goes on to say:

It’s about recognizing that the era of e-commerce centered business models is over; we’ve moved on to web software that is all about letting people interact with people and data in a fluid way. It’s about recognizing that the web can be more than a broadcast channel; collections of user-generated content can have value. No matter what, it is indeed about the new but the new has nothing to do with technology; it has to do with attitude.

Danah argues that there are three dramatic changes that have been brought on by Social Software:

1. The way in which technologies are designed - The people behind these technologies are approaching design and deployment in fundamentally different ways. The key design values of the social software movement include:

• Hack it up and get it out there
• Learn from your users and evolve the system with them
• Make your presence known to your users and invite them to provide feedback
• When you make mistakes, grovel for forgiveness; your human too.

2. The way that participation spreads - Organic growth is at the heart of social software, but organic growth is not just a means of advertising - it is the primary means in which the culture of a site is formed. Values are built into social software, and spread through the networks of people who join.

3. The way people behave - Along with social software came a new way of building context. Unlike in early social technologies (usenet etc) that were about finding people with similar interests the current movement is about people first and topics second. It is far more about connecting to people and watching shared interests emerge through that. Context is no longer defined by the topic but by egocentric collections of people.

A few observations/thoughts that spring to mind:

On technology - I feel that some of this thinking could help bring traditional waterfall development at large organization out of the stone age. I am not talking about mission critical financial applications, but I think in general most 'internal' customers at companies would rather have in-house software on their desk sooner with a few bugs than wait much longer and realize that it wasn't what they really wanted in the first place.

On Participation - How does this aspect affect deployment of social software in business situations and/or B2B environments. I feel that social software can add tremendous value in the business world, but will competitive thinking stand it the way?

On Behavior- How will this movement impact company cultures as organizations begin to tread down the enterprise 2.0 path and experiment with social software. Will it work at all, given that the context for these applications is born in the consumer and social communities.

Act with Purpose

Have you ever found yourself so busy that you fail to see the forest for the trees? That is, you are so busy doing 'tasks' that you forget why you are doing them? I think this can happen the best of people in any organization large or small. Due to constraints (financial, resource etc) small companies are less likely to do this or at least do it for long before they find themselves out of business, but I believe it is something that you need to remind yourself about every day. I found a quote the other day over at Found+Read that sums this up very well:

Don’t confuse activity for progress.

Time is precious. Act with purpose.

Its not enough to throw this out in a staff meeting, up as a quote on the wall or even as part of your company values unless you also live it every day. Remind yourself regularly, make it a part of what you do, and also part of how you speak. It will then spread to others and become rooted in your culture.

Many times, I believe that large companies could become less bloated, more efficient and effective if they could just embed this simple philosophy, not just as a statement inside their company walls, but as a strand into their cultural fiber.

(By the way a little plug for an item in my blogroll - Found+Read is a fairly new entrepreneurial blog that is a great resource for anything who falls in this category or wants to fall into this category. The other think I like about it, is that it is a blog with some social networking aspects build it - to me this model makes it more 'sticky' than other blogs in your feed list)

Sketching Ideas

There is an article in Business Week that discusses a new book called Sketching User Experience, by Bill Buxton (Microsoft). Although I found the article to not be particularly meaty in terms of useful information, the concept of the book did ring true for me, coming from a background in business and system analysis and based on our current practices at Balihoo.

Inline with what Clayton Christenson describes in The Innovators Solution, Bill explains that companies are often very good at N+1 - enhancements to current products, but often do a very poor job at creating the next 'N'.

When designing new products people often jump straight into building prototypes, which are typically very detailed and can be very expensive. Sketching he says is the place to start:

Sketches, he argues, are quick, inexpensive, disposable, plentiful, offer minimal detail, and suggest and explore rather than confirm. (It should be noted that he doesn't limit "sketches" to pen on paper—a sketch might be digital or three-dimensional.) The value of sketching is less in the artifacts themselves than in the cognitive process of working through dozens of ideas, of considering as many options as possible, and allowing each option to raise new questions.

In our startup we use the concept of 'sketching' extensively to support rapid development.
With 3 week development sprints we create hand-drawn GUI prototypes in preparation for development planning as well as often real time on white boards during sprint planning sessions. A few great reasons to use hand drawn mock-ups:

• They are very fast to develop and easy to re-create.
  
• There is no need for expensive tools that people will spend excessive amounts of time and energy learning and making something look perfect that will likely be out of date in a couple days.
  
• People inherently will provide less suggestions and feedback, the more 'professional' looking the mock up. Rough sketches will make people more open to suggesting changes.
  

If you do need to keep images in soft copy, use a digital camera and take pictures of white boards, or a scanner for paper mocks. (eg - we need to post images of these online to our offshore testing team). Its not just screens - we use sketching concepts to understand and designing new business processes, data relationships, and business models.

What does sketching do for us?

• Articulate fuzzy concepts to others (fuzzy front end)
• Provokes more conversation, challenges, questions, and exploration
• Translates business ideas to developer better than the written equivalent
• Developers feel more empowered to challenge, which ultimately helps create a better product

For this to work we:

• Have a very high 'white board to usable wall space' ratio in the office
  
• Use rapid development processes that do not allow for heavy design (focus on working code)
• promote iterative thinking - Software is like sculpting. Each iteration chips away more of the rough edges. It doesn't have to be perfect the first time.

So what about a prototype? According to Buxton, if sketching is about asking questions, prototyping is about suggesting answers. I would say, let your product be your prototype, and let you customers suggest the answers. However sketching is the place to get you started and moving.

Recognizing Creativity

Creativity is a great word but often hard to describe in a business sense and even harder to grow as an skill. Tom Haskins has a very thoughtful post that can help you identify creativity in yourself, and in doing so provides some great direction to help you grow your own creativity skills as well as those on your team or in your organization.

The key points:

• If you're learning from this, you're being creative. Making sense of new information is creating links, frameworks or containers in your own mind.
• If you wonder where creative ideas and inspired actions come from, you're being creative. With a picture of being open to receive what comes to you, you are in a frame of mind to get more creative.
• If you're thinking this experience is like something else, you're being creative.
• If you see learning happening to you, you're being creative.
• If you're feeling fluid, you're being creative.
• If you're moved by what shows up in your world, you're being creative.
• If you're grateful for what you're given to say, see and think about, you're being creative.

Practice you creativity and help others improve their ability to be creative. Creativity will lead to ideas and ideas will lead to new ways to think about your business and how to be successful.

Thanks for a great post Tom. I read a lot of informative blog posts every day, but I love to find those 'golden nugget posts' that keep you thinking well beyond the point when you flip to your next RSS feed.

Rethinking The Newspaper Industry

Yesterday, I was at a conference on the impacts of new media on marketing for the Capital City Communicators. One of the panel discussions centered around the changing interactions between marketers and journalists. What I found most profound after listening to the panel which included players from both sides - it was yet another example of how baffled, and stubborn most newspaper organizations are regarding the changes in the industry. These changes are rocking the foundation of a business model that is well over 100 years old. They simply have no clue on how to turn things around, so here are 10 thoughts I had after chewing on this issue for a day. I am not a journalist (at least in the mind of a journalist) but maybe that’s a good thing! Its always easier to think on the edges, when you are not trying to defend the status quo.

1. The internet (and other new media) is not just another channel to pipe the exact same print content. Newspaper organizations need to take full advantage of the this channel's ability to provide richer interaction to provide the customer a unique experience will make it valuable and something that can either supplement or provide an alternative to traditional print media.
2. Traditional print was a time of scarcity (of space). Now, scarcity is no longer an issue. With new media you have the ability to make anything available – not just what you think is important. The New York Times tag line has always been ‘All the news that’s fit to print’. Remove this elitist mentality from your thinking.
3. Print is no longer effective for breaking news. It’s a time-to-market issue.
4. Satisfy the long tail of news readers. Editors shouldn’t be choosing the content – they need to figure out ways for their customers to help them, and better yet – figure out ways to create unique content for all users.
5. Use your online channel to better understand customer needs.
6. Every piece of news is news to someone.
7. People will pay for things that they see value in. If given the exact same content across two channels, but one was free, would you pay?
8. Journalists should stop thinking of themselves as only news breakers or news creators. I believe the future is in aggregation. Aggregation of information, diverse opinions, providing local perspectives etc.
9. Don’t just think about readers as customers in your business model – think of them as potential suppliers. Think about the full business ecosystem of a newspaper organization in the new economy.
   
10. You can only have one primary customer. Think hard about who it is, and who it should be in the new economy. Readers? Advertiser? What business models will work based on this perspective?

All well and good to provide this type of commentary as an outsider right, but in a future post I will describe a couple of business ideas I came up with that might help bring a traditional newspaper business over the hump.

Blogging is a Commodity

David Armano posted some thoughts from a presentation he did this past weekend about his experience and learnings with blogging. (Jason Alba took notes as well) Although blogging as a topic is discussed a lot, people are still learning, culture is shifting and there were definitely a few interesting insights he brought up:

You are not 'a Blogger' - you are a person who has something interesting to say. Blogging is a commodity, and anyone can do it. Calling yourself a blogger takes away from what makes you unique. Your talents, passion and personality does.

He discusses this concept and how it relates to your personal/corporate brand. Does your blog represent your extend your brand? Are you writing about what you are interested in or what you think others will be interested in. Are you creating content unique to you with your perspective or recycling content that others have created?

The interesting thing is that these concepts apply not matter if you are a single person with something to say, a sole proprietor of a business, a small business or a large corporation. The key with blogging is to be yourself. This is always so much easier than trying to be someone else anyway.

Allow Users to Experience Magic

At our weekly business breakfast meeting, we had a new member - a seasoned entrepreneur who provided some great insights to our discussions. While telling us a little about himself - he described how a number of years ago he started following a childhood dream of being able to fly his own plane and got his pilots license. He made a great comment (I am paraphrasing):

"Sometimes I get nervous about when people ask me about what type of engine I have in my plane. To be honest, I don't know, and don't really care. Flying is not about the technology, its that magical feeling of leaving the ground."

This comment made me think about how companies should view their products/services. Its not about whats under the hood but the customer need that it is satisfying (basic utility, emotional needs, social needs etc) Some will want to know and see whats inside, but most just want to make their lives, job, task better through its usage. Think about how you can make a product that allows your customer to experience the 'magic of leaving the ground'.

The Reputation Economy

I was at a conference recently where one of the presenters threw out some blogging statistics (unfortunately I don't have the source in my notes). 17% of companies currently are blogging. 35% expect to be blogging by the end of 2007 and 48% have no plans. Almost half of the companies out there have no plans to implement a simple (and almost free) means by which to start meaningful conversations with their customers.

A year ago many companies and executives still didn't even know what a blog was. Now it is unlikely that there is a CEO that doesn't know what one is, however the problem they are trying to figure out now is how to enter into this game without screwing up... and by the way screwing up means different things depending on who you are talking to - Peers, shareholders, investors, customers, industry experts, and other bloggers. Unfortunately it seems that most are just planning to ignore it.

What companies need to understand is that we are now truly in the reputation economy. Of course having a good reputation has always been important, but in the past companies had some means of controlling reputation perception through PR and advertising. Additionally, the mechanisms by which reputation spread was somewhat limited. You may have a good or bad reputation in your town, but move out from there and its like starting over (which could be either a positive or negative depending on the company).

Its similar to the ebola virus. It has always been around, but if it hit a small village it might wipe out the town the it could only spread that far since there were little to no connections outside of the town. Then towns became closer together, and faster means of transportation got developed, and the virus now pops up in many different places and everyone gets in a panic about the new virus...Social software tools are the rapid transportation mechanisms that are allowing reputation virus's spread quickly, pop up in new areas and surprising consumers... and can no longer be contained.

And its not just blogs that determine your reputation now - A plethora of social tools are now going mainstream. Wiki's and social networks from the behemoth mainstream players to the growing population of niche social networks, are the places where your corporate reputation will be determined - not your PR engine.

What makes this entire situation more interesting is that not only are tools available for the market to define your reputation, but whatever they define will be recorded for eternity in search indexes.

So for the nearly 50 percent of companies that have no plans to blog (and presumable no plans to use any other social tools), ignoring the change is not going to solve the problem. The solution is to learn, participate, communicate, and learn some more. Above all be humble.

The Right Channels to Your Customer

The Pew Internet & American Life project has published a new study about the growing digital divide across America. According to John B Horrigan, 31% of America fit into the Elite tech user category, but almost half (49%) fall into the category of 'few Tech Assets'. So for all the hype about Web 2.0, many still do not use it or even care to use it.

Obviously age and other demographic differences play into how people slot into the different groups, but still, in an age where internet advertising is growing rapidly, are companies leaving a large portion of their consumers on the advertising table? There are more channels than every before to reach consumers. As a business, its important to not just follow the hype about internet growth. Be sure you understand who your customers are and how you can best reach them. Second - treat this as an opportunity do draw these customers into a meaningful conversation through new media channels. If they see value in using more interactive channels provided through Web 2.0, they they will begin to use them.

Going Into the Wind

A quote from Mark Cuban:

"If other people are coming to the same conclusion as I am, I think 'This is a business I shouldn't waste my time with'"

Maybe a little over the top, but something to think about. At the same time, don't ever be naive to think that you are the only one with your idea. There are other people with the same idea in their head right now. Its just a question of who has the desire and ability to get to market quickly with the right business model. (Notice I didn't say first to market).

Often, a little competition is good, and a sign of an emerging market. If you are the only one there, is there really a market? Industries with entrants are good. Ones with market leaders are bad. The great thing about the new economy is that ideas are now spawning not just new products and services but entirely new industries.

Going into the wind, and thinking on the edges is the place to start a great new business.

Continuing Evolution of Web 2.0

In some respects the web 2.0 surge has been an amazing open market innovation incubator. It has allowed the market to innovate off in any direction and produce some very interesting products through easy access to open source tools and data offered up freely by large platform vendors through API's. Unfortunately, startups in this space are usually 'cool tools' pretending to be businesses with a revenue model that likely has little depth beyond advertising with Google ad-words.

John Hagel suggests that Web 2.0 is currently going through an evolution, and points out some important considerations for both the entrepreneurs as well as the the platform companies that are supporting these. For startups the days of having no ambition to build sustaining business models beyond a strategy of feeding off of others in hopes for a high priced buy out are quickly coming to an end.

John says that entrepreneurs in this space need to understand these shifts to combat the change in the environment:

First, you can accelerate the innovation in the services you offer so that you are constantly one or two (or more) steps ahead of those tempted to copy you. Second, you can find ways to use your service offerings to build trust-based relationships with your users, ideally with some powerful network effects that will make it very difficult for later entrants to pry these people away from your service. Ideally, these two approaches can be integrated by motivating your users to enhance your services themselves so that the more users you have the better your services become – the essence of Web 2.0.

In addition I feel its important to think about how the plethora of features can be combined, tweaked and used for real business application. Think enterprise 2.0. If there is a business application, there is revenue. Take wikis. They quickly evolved into a feasible tool across many business applications, and although you can still get them for free, there is revenue potential in not only the product but service and support. Even Twitter is in the early stages of evolving into a potential business tool.

In many cases the biggest barrier is not finding a use for these tools in business, but changing the perception of value within organizations. Consumers are more open to change and great proving grounds for concepts that can then be applied in business. The consumer landscape allows you to build and test a network before carrying it into the business world. It is interesting that business software used to drive consumer software, and now it is often the other direction.

Innovation Should Be Elegant

The Elegant Solution is what Mathew May says companies should be after when they innovate based on his work over a 10 year period with Toyota. Simple is better. Elegant is best. There is an excellent executive summary of this book on ‘Change This’, if you want to get the key concepts, but I have summarized some of the items I felt where most influential. Also having worked at Toyota myself, I can attest to the forward thinking nature of this amazing company.

According to May, the elegant solution is one in which the optimal outcome is achieved with minimal expenditure of effort and expense. It is about value, not gadgetry, and it is about not losing site of the why behind the what.

Some other key thoughts to consider about elegant solutions:

• People don’t want products and services. They want solutions to problems.
• Elegant solutions embrace an overarching philosophy of doing far more with much less
• An elegant solution is recognized by its juxtaposition of simplicity and power.

Toyota has 3 primary principals of innovation that drive toward elegant solutions:

Ingenuity in craft: Ingenuity means free thinker. Companies don’t innovate, people do. How have you changed the way you work in the past week?
Pursuit of Perfection: The pursuit of perfection is not focused on achieving perfection, its focused on chasing it. Imperfection drives innovation.
Fit with Society: “Great innovation is great in large part because of context. Context separates invention from innovation. Context is like the frame in art. If the canvas doesn’t fit the frame, the whole thing doesn’t quite work well."

10 Ways identified to put these principals into practice

1. Let Learning Lead: To what degree is experimentation built into your core work processes?
2. Learn to See: How well do you understand the problems your customers face?
3. Design for today: Focus on clear and present needs. If your idea became a reality today, how well would it do?
4. Think in pictures: What opportunities exist to use images and visual references?
5. Capture the intangible: How do you connect emotionally with your customers?
6. Leverage the limits: Innovation demands exploiting limits. Which goals will stimulate new thinking?
7. Master the Tension: How can you generate creative tension?
8. Run the Numbers: What patterns can be investigated to challenge convention?
9. Make Kaisen Mandatory: Continuous improvement always. How do you sustain a steady flow of ideas?
10. Keep it Lean: Complexity destroys value. What elements of complexity would you customers love for you to remove?

If you find this interesting, I encourage you to read the manifesto and or buy the book to look for applications in your organization.

Marketing is Social

I was reading through a slide presentation posted by Stowe Boyd that he presented recently on social media . Although I didn't see/hear the actual presentation, one of the slides in the deck really jumped out at me, and I thought it would be worth posting here as we rethink the way business works in the new economy.
In essence, make marketing a social experience with your customers to build better, stronger relationships instead of focusing on how to sell them more of your product offering through gimics. In todays economy consumers have more choice than ever before. This choice coupled with decreased brand loyalty and ever faster comoditization will drive companies to become better listeners. Treating customers like partners through authentic interactions will create lasting relationships and company longevity.

Innovation and the Pace of Change

The term futurist sometimes seems strange to me with the ever increasing pace of change. the future used to be about decades into the future, and now it may only be months or years. Futurist, Jim Carroll's often has thoughts on the future of future of business. He has recently listed 10 truths about the future of business, however given the pace of change, these are actually trends that you need to consider now!

(I have trimmed down some of Jim's commentary and added a bit of my own.)

• It’s incredibly fast: Product life cycles are collapsing, and comoditization happens faster than ever.
  
• It involves a huge adaptability gap: Change management will cease to be an topic for projects or workshops, but a constant reality.
  
• It has a huge instantaneity: The average consumer scans 12 feet of shelf space per second. Most news becomes old hat within 36 hours of emerging. We live in the era of the rapid idea-cycle.
  
• It hits you most when you don’t expect it: Every organization must deal with two realities: the rapid emergence of new technologies, the sudden adoption of old-hat ideas.
  
• It's being defined by renegades: Industry expatriates are redefining and innovating through their own startups. See my post on thrill seekers.
  
• It involves partnership: Think 'business ecosystems' - not just 'my' business.
  
• It involves intensity: Running your business at video-game intensity. (Thanks Jim for the great metaphor!)
  
• It’s bigger than you think: Don't just think inside the boundaries of your industry - be prepared for competition from companies that you had never thought would be in that space.
  
• It involves innovation intensity: With rapid change, everyone in an organization must innovate. Innovation is no longer a responsibility for the few.
  
• It comes from experiential capital: Learn and relearn. Corporate equity isn't just money: it's the cumulative experience and knowledge of the team.
  

After reading these, do not dwell on how they will impact your current business. It is much more prudent to simply being thinking about how and when you will shift your business model, strategy and processes to handle these. Turn them into opportunities instead of threats.

Twitter For Marketing

On a previous post about Twitter, I stated that people would begin to come up with ways to utilize this tool for business purposes, and today I came across a post on the blog Influential Interactive Marketing discussing 4 interesting ways in which twitter could be used for marketing.

1. Capture the live pulse of an event
2. Deepen a static experience through live commentary
3. Facilitate collaborative watching
4. Add a new dimension to promotions

To me, rethinking the use of Twitter for specific applications such as these will help it move from being a passing fad into something that will provide enjoyment, community and business value.

Citizen Marketing

The concept of citizen marketing is born out of a desire for connection and sharing coupled with the complete democratization of production tools, which has created an amateur culture according to Ben McConnell who spoke today at an annual entrepreneur week event called Kickstart, as part of his Citizen Marketers book tour. Overall it was an interesting and lively discussion on the changing face of marketing which has obviously been kept current as the tour has progressed due to the incorporation of recent events and videos.

After the book first came out talking about the 4 F categories of citizen marketers (Firecrackers, Filters, Fanatics and Facilitators), I sensed a likeness to the categories identified in the Tipping Point (Maven's, Connectors and Salesmen). I blogged about it here. Although the book is still on my 'to read' list, after today's talk I still feel these parallels are interesting and applicable.

Besides an interesting discussion on the 4F's a few other key learnings I took away from today's talk:

• Build Word of Mouth marketing into the DNA of your business
• You are your Google results
• The importance of the 3 V's when you think about your customers - Voice, Vote, Vocation
• Google is more than a Search Engine - It is a reputation management system
• New media is now a picking grounds for traditional media to find stories, instead of the other way around.
• Ben is a pillar of fashion with his cool shoes and sweet t-shirt:)

Thanks Ben for a great talk today and it was a pleasure to meet you in person. Good luck with the rest of the tour!

Cultural Markets

I was forwarded an interesting article today from the New York Times on Cumulative Advantage in marketplace success. Its an interesting read about social influence on creation of 'hits'. It is based on a a study done that claims that reliable hit prediction is impossible, no matter how much you know.

Conventional marketing wisdom holds that predicting success in cultural markets is mostly a matter of anticipating the preferences of the millions of individual people who participate in them. From this common-sense observation, it follows that if the experts could only figure out what it was about, say, the music, songwriting and packaging of Norah Jones that appealed to so many fans, they ought to be able to replicate it at will. And indeed that’s pretty much what they try to do. That they fail so frequently implies either that they aren’t studying their own successes carefully enough or that they are not paying sufficiently close attention to the changing preferences of their audience.

The common-sense view, however, makes a big assumption: that when people make decisions about what they like, they do so independently of one another. But people almost never make decisions independently — in part because the world abounds with so many choices that we have little hope of ever finding what we want on our own; in part because we are never really sure what we want anyway; and in part because what we often want is not so much to experience the “best” of everything as it is to experience the same things as other people and thereby also experience the benefits of sharing.

The concepts discussed in this article have a very similar ring to the concept of social epidemics put forth by Malcolm Gladwell in his book The Tipping Point, however, the interesting part about this study is how 'hit' outcome would never be the same if repeated due to changing conditions and the and the influence of the (cultural) market itself.

If markets not only reveal our preferences but also modify them, then the relation between what we want now and what we wanted before — or what we will want in the future — becomes deeply ambiguous.

For business's it doesn't mean we should stop trying to predict future results or measure information from the past, but it is important to be aware of cultural market effects and the relative impact on your product or service.

Change is Inevitable

Amazing video entitled 'Shift happens' . This is why 'Kinetic shift' is is important. Shift the way you and your business move.

Stealth Disruptive Innovation

Clayton M. Christensen and Michael E. Raynor describes two types of innovation in their book "The innovators Solution": 'Sustaining Innovation' and 'Disruptive Innovation'.

Sustaining innovation is an innovation that brings to market a product or service that a company in the market could sell for higher margins to its best customers. In other words, sustaining innovation brings a better product into the market.

A disruptive innovation brings to market a product not as good as the products in the current market, and so it cannot be sold to the mainstream customers. But it is simple and it is more affordable. It takes root in an undemanding portion of the market, then improves from that simple beginning to intercept with the needs of customers in the mainstream later.

the authors contend that the odds overwhelmingly favor the incumbent leaders of the industry in battles of sustaining innovation, whereas the entrants have the upper hand for disruptive innovation.
(if you find this concept interesting, I recommend reading the book. You can also get a short overview in this interview with the author.)

As an entrepreneur this would naturally steer you towards creating disruptive innovations, because if you agree with the concepts in the book, you have a high likely of getting clobbered if you try and build a business with a sustaining innovation. The problem with focusing on disruptive innovations is that often entrepreneurs often miss the mark about what customers needed often due to a lack of knowledge of a particular business/industry or issues that customers face in that space. Obviously by having members of your team that have a background in that space will help (and it is unlikely you will get much credence/funding/support anyhow without industry knowledge on your team), but this still does not guarantee success.

However in some cases it might be possible to do both and this could be a very successful path. Going to market as sustaining innovation to build out the right feature set, and then ultimately turning to a disruptive model for growth. Takes whats happening in the housing market. Internet companies are creating all sorts of tools and services that are currently sustaining innovations for real-estate agents/companies. Solutions help agents post houses (information, pictures, movies), find houses faster and more efficiently for their clients, set up agreements between buyers and sellers etc. These solutions aren't perfect, however through usage the products are being refined, improved and integrated until ultimately a large majority of consumers will begin to wonder why they really need a real estate agent? (Early adopters already thing this) Now a sustaining innovation has become a disruptive innovation.

Often I think this happens somewhat by accident, but the creative entrant might be able to drive this path from the start, depending on the industry/space they are playing in. Industry, and more importantly how forward thinking the members of that industry are will impact greatly on the success of this strategy. If, however you can make it work, it will ensure an efficient focus of your resources on building/embedding the right product initially before shifting to a disruptive model for growth.