Whistle Through Your Comb

Closing Shop: My Last Post

2007-12-27T12:44:00.000-05:00

In his book The Hero with a Thousand Faces, Joseph Campbell wrote about the meta-story called The Hero’s Journey. A model from which infinite and highly varied copies can be reproduced each resonating with the essential spirit of the model. It, in a nutshell, follows this path:

The reader finds the unsuspecting hero living in his safe comfortable ordinary world. But soon the hero is called to action (either by himself or someone else). He is asked to cross a threshold into a foreign special world so that he may attain an object of desire (which could be either physical or mental). Though this special world is intimidating, even dangerous, he soon encounters allies, tools and tests to help him along the way.

Eventually he discovers where the object of desire is kept: the cave (an dark, complex inner sanctum – either physical or mental – which, to penetrate and emerge from, will require a great deal from the hero). In what is called the approach to the cave, the hero prepares himself either mentally or physically for this task. Upon entering, he confronts his greatest challenge: the ordeal. But thanks to his preparation, tools and learned skills, he is able to overcome the ordeal and seize the reward.

But the tests are not over. On the road home the hero faces one last challenge which causes something in him to die (either physical or metaphorical). Who he was in the past dies, and who he is now, thanks to the adventure, is born. This is called the resurrection. No longer the person he was when he entered this adventure, he is now stronger, braver, more intelligent, more enlightened, more human, more alive...more whatever. It is only after this resurrection the he can return to his ordinary life as a new being with new insights gained from his adventure. This last stage is called Return with the Elixir.

A story that flows through each of these stages can be considered complete. (Admittedly I’m oversimplifying the requirements of story here.) For this reason, I feel that Whistle has been a complete story for me:

I left (Threshold) my analog world (Ordinary World) for the digital blogosphere (Special World) after an internal desire (Call to Action) to start a blog. My whole goal was to find new ways of thinking and doing in advertising (Object of Desire). Along the way, I met tons of brilliant helpful people from whom I found inspiration and knowledge (Allies, Tools).

Nevertheless, I became frustrated with the blog and my thinking. It felt uninteresting and unproductive (Tests). I felt like I was writing about the wrong stuff and looking in the wrong places. So I sketched a redirect to figure out a way to get what I wanted out of this blog (The Approach to the Cave). I realized the underlying systems of marketing that influence its outputs were what I had to focus on – which is a pretty damn big bear to wrestle (Ordeal).

I used everything I’d learned up to that point and more to write about agency structures, the creative process, innovation algorithms, office design, experience design and the fact that an agency’s most important product is failure. After some mental gymnastics, I found what I had came looking for: transformation design (Seize the Reward).

Weeks went by as I tried to translate my intuitive and scattered belief in the value of transformation design into a coherent articulation (The Road Home). After a lot of work, I think I’ve figured it out.

And for that reason, I’ve decide to close Whistle (Death) and open a new blog (Resurrection) named Volume 2 (Whistle was volume 1) dedicated to developing transformation design in the marketing space and sharing that journey and knowledge with everyone (Return with the Elixir).

New adventure, new blog.

I’ll of course leave Whistle up, but won’t post anything new after this post.

Thanks to all of you who helped me in this past adventure. You’re comments, emails, suggestions, and support really made this a worthwhile transformative experience. I hope you find Volume 2 interesting as well.

“I’ve had a hell of a lot of fun, and I’ve enjoyed every minute of it.”

Errol Flynn

It’s Off to New York I Go

2007-12-19T13:16:00.001-05:00

(eyetwist)

As some of you know, I’m leaving McKinney.

It’s always tough to leave a place that was so supportive in so many ways. I won’t list them all but a few stand out:

I always found an ear and encouragement for my crazy ideas.
The opportunities to grow didn’t offer incremental growth; they offered substantial growth.
I always felt the leadership of my department and the agency genuinely championed my career development.
McKinney always offered a sense of possibility - for myself and my brand teams. Nothing was off the table, ever. It was all possible, always.

As I write this I feel a need to single out some people and thank them so you all know about them, but then this would sound like an Oscar speech and that would just be a bit self-aggrandizing. But suffice it to say, there are some special people at that agency I would, in a heart beat, love to work with again and will be sad to leave.

But change is a good thing. It’s necessary. That’s why, after 3½ fun-filled and intellectually stimulating years, I’m ready to tackle my next challenge.

As of January 7th, I will join Brian Collins as the head of strategy for his new design firm: Collins. Specifically, we will be a transformation design firm. (As many of you have read in my blog, TD is an emerging discipline with only a handful of practitioners worldwide. While, these firms successfully focus their efforts on the social services sector – i.e. transportation, healthcare, public restrooms, disaster relief, etc – we will expand TD’s reach into the innovation-starved marketing industry to provide a fresh perspective and approach to creating emotionally and transactionally strong relationships between people and companies.)

Collins presents me with an opportunity to not only practice what I’ve preached/devised on this blog but also to help build a new department, a new firm and a new discipline. I could not be more excited for this opportunity or feel more passionately about what we’re doing.

The Southern Part of Heaven has been fun, but for right now, it’s off to New York I go.

Need Help: Looking For Intellectual Capital Sites

2007-12-10T22:22:00.000-05:00

(skidder)

So I'm a little lost and need some help.

Q1: Can anyone point me to some "intellectual capital" sites? Coudal and Mckinsey Quarterly come to mind, but after that I'm drawing a blank. Industry isn't important. Style of layout isn't important. Content isn't importat. I just want to look at a bunch of intellectual capital sites out there.

Q2: As inquisitive, auto-didactic people, what would y'all like to see in a intellectual capital site that is, according to your standards, interesting and helpful? Specifically, a site that sits at the intersection of business, design, culture and marketing? Maybe a better way to say this is: "How would you shape an i.c. site so that it was valuable for your (yes, you personally) intellectual growth?" Is that even possible?

I've got something cookin' and I want it to appeal to y'all...

Transformation Design: Redux

2007-12-08T20:25:00.000-05:00

A while back, I hastily slapped up a sloppy post about transformation design. If you only read my post and not the RED document that described it, I’m sorry. I have no doubt I left you confused. Maybe even annoyed.

I’ve continued to refine my description of TD since then in hopes of carving the elevator version explaining why it is important in the marketing and business space. What follows doesn’t feel perfect yet as it's not "bite-size" (so please lob your revisions and/or points of confusion at me), but it does fit on one 8.5”x11” in size 12 font:

WHAT IS TRANSFORMATION DESIGN?
Marketers shape fact. Traditional designers shape form. Transformation designers shape behavior - of people, employees, systems and organizations.

TD’s offering is not the tools, components, systems or experiences it creates to elicit the new behavior; the offering is the changed organization and/or individual.

This is critical because the right answer to a business challenge is not always a new product, market offer or brand idea. The right solution may be a new process, service offering, interactive platform, retail experience, product use, system approach or an entirely new business. In short, the solution may be a new and sustainable behavior – a.k.a, a transformation.

OUTSOURCING V. CO-SOURCING
Rather than acting as master designers who emerge from their black boxes to unveil their elegant solutions, transformation designers mediate diverse points of view and facilitate collaboration in defining the problem and prototyping the solutions. They create a neutral space where a range of people, whose expertise may have bearing on the problem, can work together.

This is called “co-sourcing.” Outsourcing is something done for you. Co-sourcing is something done with you.

BENEFITS
Applications abound:
Behavior has no boundaries; neither does transformation design. Its application ranges wide: marketing programs, social services, supply chains, product experiences, etc.

Co-sourcing builds capacity, not dependency:
Because individuals and organizations operate in an environment of constant change, the challenge is not how to design a rigid, end solution, but how to design a means of continually responding, adapting and innovating. Transformation design’s co-sourcing approach leaves behind (in organizations and individuals) not only the shape of a new system of behavior, but the tools, skills and organizational capacity for ongoing change.

More time spent solving, less time spent selling:
Participation in the process gives all stakeholders ownership of a vision and helps champion the chosen direction.

Less risk, less time, less cost:
TDs prototype ideas before committing all resources to the agreed upon solution. Doing so means they commit a little to learn a lot so they fail earlier to succeed sooner.

Deep change, not cosmetic change:
TD solutions are designed to create sustained change of behavior over time in our clients and/or their customers.

"I Make Moves"

2007-12-07T10:56:00.001-05:00

Complex Magazine: Is there a statement you're trying to make with the album?
LIL WAYNE: Nah...not at all, not at all, I don't make statements,
I make moves.

(Via Seth)

The Verfier Approach: Researching Research

2007-12-06T15:55:00.000-05:00

A detail from the enigmatic Voynich manuscript, which sold for the equivalent of
$ 30,000 in 1586.

This is an interesting article (sent to me by Petar) from Wired. It offers a new research approach - a kind of calibration if you will.

It's called The Verifier Approach. Essentially, it is research on research. Rather than accepting the standing research of a field and building on it, the Verifier Approach makes a researcher look at all the research from a 35,000 ft view to find holes, overlaps, biases and classic human error mistakes and their rippling effects. The result, is a better understanding of the quality, scope and depth of the standing research and new avenues to research.

The verifier method boils down to seven steps:

Amass knowledge of a discipline through interviews and reading;
Determine whether critical expertise has yet to be applied in the field;
Look for bias and mistakenly held assumptions in the research;
Analyze jargon to uncover differing definitions of key terms;
Check for classic mistakes using human-error tools;
Follow the errors as they ripple through underlying assumptions;
Suggest new avenues for research that emerge from steps one through six.

Curiosity-Based Research

2007-12-04T18:21:00.000-05:00

In this TED presentation, UC Berkeley biologist Robert Full shares his fascination with feet. His research on the subject is something he's calls "curiosity-based research." He was just curious about feet, so he looked into it. And wouldn't you know, he and his colleagues have found new and useful technologies.

So often we have to justify a research project - which, to me, always feels like a paradox: deciding how to use information we don't have yet. If we don't know it, how can we be expected to know its uses? It's putting the cart before the hose if you ask me.

The most useful research, I've found, is the kind that doesn't predetermine uses. Instead, we let the knowledge leads us.

Anyway, random thought for the day.

Pests

2007-12-03T11:29:00.000-05:00

"We don´t advertise, because we don´t want to get on people´s nerves."

Uwe Lübbermann
Founder of Premium Cola
A German cola company
Via PSFK

The John Wayne of NASA

2007-11-15T14:41:00.000-05:00

This is undoubtedly one of the more badass presentations I've watched on TED. I love how Bill Stone, at the end of his presentation, slams his stake in the ground, puts up the most badass quote ever on the projection screen and then walks off the stage to a loud standing ovation of new disciples who would follow him to the most dangerous places on earth and space. And not once, did he acknowledge their thundering applause.

After all, he doesn't care about adulation. He doesn't need it. He's the John Wayne of NASA.

GeoEngineering

2007-11-15T11:44:00.000-05:00

I love this kind of thinking: creative, big, courageous, intelligent, deductive, generous.

More of the Same

2007-11-13T11:21:00.000-05:00

(Emo Squid)

Rearranging the deck chairs on the Titanic doesn't solve the problem.

Great Presentation

2007-11-12T14:26:00.001-05:00

Corruption, Abolition and Prohibition in the Read-Write Culture

2007-11-09T14:44:00.001-05:00

When Advertising becomes Information

2007-11-08T13:44:00.000-05:00

"When they finish the process of better and better targeted advertising, that’s when the whole idea of advertising will go poof, will disappear. If it’s perfectly targeted, it isn’t advertising, it’s information. Information is welcome, advertising is offensive."

Via Adam

*Based on the stuff I've written before,what he calls information, I'd call knowledge.

Face Your Pockets

2007-11-08T11:45:00.000-05:00

Empty your pockets. Spread the contents onto a scanner bed. Press you face to the scanner. Hit scan. Upload your picture to Face Your Pockets.

I have no idea why, but I think this is one of the cooest things I've seen in a while. Much cooler that Movers and Shakers thing - kids that shake their heads violently and take pix of it.WTF?

Some Good Stuff in Here

2007-11-08T10:31:00.000-05:00

Polygamous Weddings Gareth Kay from trumpet.

Quotes for Planners

2007-11-08T10:24:00.000-05:00

"We are not in the business of keeping media companies alive. We are in the business of connecting with consumers."

Trevor Edwards, Nike
NYT 10.14.07
Via Gareth

Shift Space

2007-11-07T14:44:00.000-05:00

Here is a cool little web app I stumbled upon today: ShiftSpace.

In short, shift space gives you the ability - albeit simplistic for now - to manipulate a website layout. But here is how they describe it:

"ShiftSpace is an open source layer above any website. It seeks to expand the creative possibilities currently provided through the web. ShiftSpace provides tools for artists, designers, architects, activists, developers, students, researchers, and hobbyists to create online contexts built in and on top of websites.
While the Internet’s design is widely understood to be open and distributed, control over how users interact online has given us largely centralized and closed systems. The web has followed the physical transformation of the city’s social center from the (public) town square to the (private) mall. ShiftSpace attempts to subvert this trend by providing a new public space on the web.
By pressing the [shift] + [space] keys, a ShiftSpace user can invoke a new meta layer above any web page to browse and create additional interpretations, contextualizations and interventions – which we call Shifts."

The uses are useful, but basic. Though, I'm sure it'll get much more interesting in the future.

Bringing the Innovation Machine Inside

2007-11-06T12:13:00.000-05:00

“The essence of life is infinitely and mysteriously multiform, and therefore, it can not be contained or planned for, in its fullness and variability, by any central intelligence...” Vaclav Havel

CSA = Knowledge = Innovation = Wealth
In The Origin of Wealth, Beinhocker argues that both the natural world and the marketplace are innovation machines. Why? Because the two arenas are the same thing: complex adaptive systems.

A complex adaptive system (CAS) is a decentralized system of many dynamically interacting agents who process information and adapt their future behavior to achieve optimal results based on the results of past behavior. Such behavior means micro-level interactions lead to macro-level patterns.

Implied in the above definition is that CASs learn. They learn what behaviors lead to good results, great results and bad results. They then repeat the “best practices” and suppress “bad practices.” In other words, they generate knowledge – information that is useful and fit for some purpose. (In evolutionary circles, it’s called fit order.)

In economic terms, knowledge is expressed as products and/or services – both patterns of fit order – that consumers need, desire, even crave.

In short: CSA = knowledge = innovation = wealth

Injecting Agencies with Knowledge, Innovation and Wealth.
So why do I bring all this up? Well, because a discussion of complex adaptive systems and their benefits – knowledge, innovation, wealth – seem relevant given some agencies don’t know how to adapt to their new environment.

It seems relevant given clients are crying about their agencies lack of innovation. Take my often used quote from John Stratton, CMO of Verizon Wireless, for example:

“What you [agencies] have been selling for the last 50 years no longers works.”
Madison & Vine Conference
February 13, 2006

And that of Stephen Norman, global marketing director of Fiat:

"I'm fed up with agencies coming in every few months to say the world is changing. I get that it's changing... (but) other than the speech that things are changing, I haven't seen much evidence of it in how agencies have been spending my money."
Venice Media Festival '07

Finally, it seems relevant as agencies aren’t growing at the rate they’re used to nor are they sleeping on the beds of cash they once did.

All the things agencies need CASs provide: knowledge, innovation, wealth.

In fact, our industry doesn’t bear these challenges alone. It’s a long-term struggle all businesses have and will face. According to sociologist Michael Hannan and management researcher John Freeman, companies are essentially inert. In the 1970s, the two men studied the ecology of markets. Their evidence showed while there is a tremendous amount of innovation and change in the economy at the level of markets, there is much less change at the level of individual companies. Their conclusion was that change in the economy is driven more by the entry and exit of firms than by the adaptation of individual companies.

To use economist William Baumol’s label, markets are “innovation machines.” Most companies are not.

This all boils down to two regularly explored – but still interesting – questions:

1. What prevents companies from being innovation machines?
2. How can we create a company that adapts and innovates as quickly as the world around it?

Discussing this in the larger business context is more than I have time, intelligence or wind for. So I’ll focus on creative firms (which obviously includes ad agencies).

The Big Man System: When Your Goal is Efficiency and Scale and not Innovation.
We are all familiar with The Big Man system, though we know it by a different name: Hierarchy. The Big Man – a term from Native American tribes in the Northwest coast – is the person who sits at the top of an organization dividing labor, coordinating their execution, bring things back together, and allocate the spoils. They dictate what the fitness function is and what the fit order and resources allocation should be.

There are some good things to this system:

1. Big Men work best in stable environments where they can exploit knowledge.
It’s assumed The Big Man is perfectly knowledgeable about the environment. Given this, it’s no surprise hierarchies work best in stable, consistent environments where the conditions for success don’t change much. When an environment’s fitness function is known, a good leader can organize and allocate resources in an optimal way to execute at the most efficient and effective level possible. Accounting firms, law offices and factory management are three stable, consistent business areas that benefit from hierarchy.

2. Big Men create scale
In fact, The Big Man system is the way to create a global corporate behemoth. It’s ability to process and coordinate large amounts of information and activity is unparalleled – that’s why our brains organize information according hierarchies.

However, hierarchies do have their shortcomings:

1. Big Men work poorly in dynamic environments because they slow down adaptation.
As new fitness functions emerge, new information must flow up the chain of command and decisions must flow back down. This is time consuming considering this process must be repeated over and over until knowledge of the changing environment’s fitness function is discovered. But in a dynamic environment, the fitness function is moving target that a hierarchy can never catch up with. A perfect example of this is the story of Razr whose development team had to hide their project from the Big Men at Motorola for fear of red-tape or a cease and desist order.

2. The Big Man system assumes a now debunked principle of traditional economics: the rational man.
Sitting at the top of the pyramid is, assumed, a person who has perfect knowledge of the fitness function, the environment and resources and can coordinate the activities of his/her reports optimally. It goes without arguing that no person is perfectly knowledgeable.

3. The Big Man is human and to err is human.
Even if the Big Man is very knowledgeable about the fitness function, the environment and resources, he is still prone to typical decision-making biases:

Framing Bias: How an issue is framed can affect how we think about it. This is the basis of the book Don’t Think of An Elephant.

Representativeness: Drawing big conclusions from very small and biased samples.

Availability Bias: Making decisions based on data that is easily available rather than data that is hard to find but critical to making a good decisions.

Difficulties Judging Risk: People have a tough time reasoning through probabilities and assessing risk.

Superstitious Reasoning: People tend to look for the most proximate causes of things and often confuse random chance with cause and effect.

Mental Accounting: People often value the same things differently.

4. Employees may work to please the Big Man.
From The Origin of Wealth, “In a Big Man system, the fitness function maximized is the wealth and power of the Big Man (and his cronies), rather than the overall economic wealth of the society. Thus, the creative, entrepreneurial, and deductive tinkering energies of the population are directed toward pleasing the Big Man. The immense mansions and palaces dotting the world, from grand French chateaus to the Hermitage in Russia, that delight tourists with their extravagant displays of riches are testaments to the effectiveness of economic evolution in maximizing the fitness function of Big Man wealth.”

If we all look back on our agency experience, we find the fingerprints – good and bad – of The Big Man system. But the one thing we find little of is true innovation. Sure, we can remember things called “innovation,” but closer inspection reveals them to be marginal improvements spun as innovations. The truth is simple: there are very few punctuated equilibriums in advertising’s Big Man history.

Complex Adaptive Agencies
In all it’s time on earth, humans have been able to create only one alternative to hierarchies: markets.

These two choices of information and activity organization are polar opposites:

1. Hierarchies are centralized systems used to exploit knowledge in the creation of scale in stable environments.
2. Marketplaces are decentralized systems used to explore knowledge in the creation of innovation in dynamic environments.

But when it comes time for humans to organize themselves, The Big Man system is chosen 99.9% of the time. From companies to sports teams to government to science, humans create hierarchies where ever they can.

Why is that?

It may be as simple to say creating a hierarchy is more intuitive than creating a market. As we know, humans operate according to rules of thumb and patterns. Hierarchies offer just that: Put the smart, stronger, more capable people in charge of the less smart, less capable, weaker people. Have them instruct and oversee those below. It’s an easy rule of thumb to remember and the pyramid shape is an easy pattern to remember.

But what about markets? How the hell do you create one of those?

Markets are considered more of an emergent phenomena – an “Oh!? How’d this happen?” type of thing. You can’t consciously create a market. Their complexity of choices and consideration is more than one person can ever hope to compute. So if you want to start an organization, why would you structure it in a way that is too complex for you to manage?

Maybe that’s why people create hierarchies everywhere – even when they are not effective. According to theory and deductive reasoning, a market is fit for creative environments, yet we use The Big Man system. Such a disconnect begs the question:

Is it possible for a creative firm to operate like a market – in other words, a complex adaptive system?

My gut tells me a creative company operating 100% like a market probably isn’t feasible. There needs to be some level of centralization, exploitation and efficient allocation of resources. So maybe the better question is:

Is it possible for a creative firm to operate MORE like a market – in other words, a complex adaptive system?

I don’t claim to know the answer. But if creative firms want knowledge, innovation and wealth, it seems the notion of a Complex Adaptive Agency (CAA) is an interesting and worthwhile topic to explore.

Complex Adaptive Agency: Rough Thoughts on How to Build One.
Part of the challenge with a firm adopting market-like characteristics is understanding the simple inputs that create the complex, yet innovative, activity.

Here’s a deconstruction of a market:

(NOTE: These come from both The Origin of Wealth and my own personal – yet shallow – knowledge of Complex Economics and open systems. This obviously isn’t my area of expertise so I’m positive this list isn’t 100% correct. If you know better, please help me out.)

1. Agents – These are individual interactors in a system who have the ability to learn and adjust their behavior based on their new knowledge. This could be a cell, an ant, a person or a company. It just depends on how granular you want to get.

2. Resources – Resources are energy, information and matter. These are combined and/or transformed to create value. I once said creativity happens in the collision of information. (Let’s add to that energy and matter.)

3. Openness – Markets are typically open – in other words, they constantly interact with their environment. Information, energy and matter are always flowing into and out of the market. Such a process keeps the market in tune with its changing environment.

4. Value – All markets must have value – a relative measure of worth. In complexity economics view, value is relative to its fit order: higher fit order = higher value. For a real world example, Apple creates things of immense value because their devices are easier to operate and are often better at helping people accomplish tasks – in other words, have a higher fit order.

On another note, value is particularly important as it is the fuel economic activity. Value creates specialization (agents tend to focus on those activities which allow them create the most value) which creates trade (because agents specialize, they must trade their created value for another agent’s created value) which creates cooperation/competition among agents which creates experimentation/innovation.

5. Trade Channels – There must be easily accessible platforms for agents to conduct trade. This is a bazaar, flea market, website, store front, mobile phone, NYSE, etc.

6. Payoff – What someone gets in return for creating value. This can be immediate or delayed; tangible or intangible. The right kinds of payoff lead to healthy doses of creativity bearing competition and cooperation – which are core CAS/market behaviors.

7. Modularity – Modules are the units of selection. Agents select these units and put them in combinations that allow them to create the most value. In business terms, good module combinations are captured as “best practices.” Don’t confuse modules with resources. Resources are the WHAT of market activity (“What will we use to make this product?”); modules are the HOW of market activity (“How could we turn these resources into that product?”)

8. Fitness Function – A fitness function is a particular type of objective function that quantifies the optimality of a solution given an environment’s challenges and needs.

***

[WARNING: This is where the coherency of my thinking stops. From here on out, it is loose and arguably sloppy. But the innovation process is seldom tight and neat. What follows are my first steps in thinking about the creation of a complex adaptive agency. After all, babies suck at their first few steps. I’m sure mine won’t be any different.

It’s a big topic with a lot to be said and, as far as I know, no one else is thinking about this kind of stuff. But please let me know if you know of anyone who is.]

***

So how might these elements translate into a CAA? Here are some very rough thoughts:

1. Agents – In a CAA, agents would be the employees or a community of volunteers.

2. Resources – In a CAA, there should be stockpiles of “matter” and information for creative people to play with. This runs the gamut of books to movies to guest speakers to “thought of the day boards” to video game consoles to music to idea boards to murals. The point is, there needs to be stimuli all around - stuff for people to play with, create with and/or generally just get their minds clicking. I’ve always said it’d be great to work at a place where I was always tripping over ideas.

(Anyone have ideas on how to create a stockpile of energy?)

3. Openness – In a CAA, the walls would be highly permeable. It would make a point to involve non agency people often. Maybe they bring some of them in to do a sort of show and tell about other parts of life/business/culture/science etc. Maybe they bring in smart, creative non agency people to – gasp! – work on a few projects. Google and Yahoo! are good examples of open companies. Both companies, as most of us know, have hack days which are essentially bazaars of ideas. Programmers bring their software into work and try to sell them through. These ideas don’t always align to overarching product strategies, but, the companies acknowledge, that shouldn’t negate their value.

A CAA committed to openness would also use Web 2.0 to share as much of it’s thinking with the world. Its aspiration would be to become the junction (maybe even a bazaar in of itself) where culture, business and creativity cross-pollinate. Not just a form of self-promotion, such a mechanism would be an incredible repository of thinking, recruitment and great place to seed ideas and flesh them out.

4. Value – The easy answer is to say knowledge - which we’ve said is defined as, “information that is useful and fit for some purpose.” But I feel like that is copout. Every company values knowledge. But maybe I’m over thinking it. Hmm…

5. Trade Channels – For agents within the CAA, they must have places were they can trade knowledge. There should be two trading platforms: active trading and passive trading.

Active trading could be a CAA version of coffee mornings. Or it could be a project auction block: Rather than assign new projects, the CAA would put a project “Up for sale” and, through some form of trade, find which employees were most passionate about working on it.

Passive trading would be a blog: post some thoughts and wait to hear the thoughts people “trade” back to you.

In fact, Intel has experimented with internal trading platforms. To understand which product to produce at which time at which factory, the company set up a system that allowed employees to buy or sell things internally with each other in a way that helped the company make decisions. Plant managers were the sellers who sold the rights to have products available in the future. The buyers were the Intel salesmen who bought the rights to have those products in the future in the expectation of being able to sell them to the customer. (You can learn more about it here.)

6. Payoff – Payoff, just as it is in markets, should be more sensitive to an agent’s performance in two ways: more proportionate and less response lag. In other words, an agent should receive equal increased (or decreased) payoff for the increased (or decreased) value she/he creates AND that payoff shouldn’t come once a year (as salary increases tend to do). It should come as close to moments of value increase as possible. (This gives the agent a close to real-time metric to gauge his/her performance.)

Maybe the best way to put it is to just say: humans are not altruistic; everyone does something for something.

Let’s explore this some more in the context of salary versus commission. A salary is an upfront guaranteed form of payoff. It’s meant to create security. No matter how poorly you do at your job (with in reason), you will get the predetermined salary as your payoff. But that also means, no matter how well you do, you’ll always get the same salary. On the other had, commission-based payoff rewards risk with bigger payoffs. Charles calls this the “upside of risk.” What you get in the end is a form of payoff (commission) that rewards experimentation, innovation and another (salary) that does not. Salary cocoons agents from the effects their impact and generally promotes the status quo.

That said though, creating a CAA based purely on salary promotes the status quo. But a CAA based purely on a fluctuating payoff has no safety net and can make people fearful of taking risks. The right balance must be struck between performance-based payoff and guaranteed payoffs. For instance, rather giving all employees a salary, maybe you give them a choice between low risk and high risk forms of compensation.

In the above thinking, I’m assuming payoff=money. But payoff could be lots of other things. For instance: publicity. Creative people (not just creatives) like being acknowledged. For great work internally, a CAA could show their love for their top performer publicly.

7. Modularity – In my most popular post “The Perfectly Designed Office,” I argue that a great office to work at would be one that is highly modular because it allows people to organize themselves in the most optimal way. Aside from office design, other things could be modular. Budgets, for example, could be more modular. So often employees birth a great idea, but can’t find financing. If some budget was set aside to finance “pop-up” projects more great ideas would find the light of day. Project teams could also be modular. For example, WL Gore has modular leadership and teams. Gore practices market based leadership: you become a manager by finding people who want to work for you. People choose their managers by choosing who they want to work for. If you’re a dick, you’ll quickly find yourself without a team to work on.

8. Fitness Function – In a CAA, this is more about articulating what a successful agent (employee) in a CAA would do/produce. Setting a clear articulation of “Who and what prospers in the CAA” will cause the CAA, as any market does, to adjust itself to most optimally live into that fitness function.

A cool example of this is Space 150. Every 150 days this hybrid agency rebrands itself. Essentially, their leadership rewrites the agency’s fitness function. The leadership has recognized that the world changes fast and their company and how it’s employees operate must change as well. I don’t know all the details about what happens after each rebrand (other than a big party) but the spirit of the activity is a good.

***

Again, this is all REALLY rough. I’m sure I’ll read it again in a week and think myself an idiot. But at least it begins to give structure and actionability to an abstract notion many of us probably carry around...

Evolution's IQ

2007-11-06T12:07:00.001-05:00

Meeting of the RNA tie club in Portugal Place, Cambridge, England. Francis Crick (back, left), Leslie Orgel (back, right), Alexander Rich (front, left), and James Watson (front, right). Courtesy of Alexander Rich. 1955

“Evolution is cleverer than you are.”

Biochemist Leslie Orgel

List of Brand Beliefs - Add and Adjust Please

2007-10-30T15:37:00.001-04:00

They go by a lot of names: essences, moralities, mantras, ideas, missions... I prefer to call them brand beliefs. It's straightforward.

Brand beliefs: The statement that defines a companies perspective on the world and how that world should be.

Brand beliefs are so valuable that they can shape a company's philosophy, process and product.

Cleverness has no place in these statements. Nor does corporate speak or creativity.

They require only three things: simplicity, genuineness and aspiration.

But y'all knew all that.

Despite the fact we all know of great brands and have a sense of their core beliefs, we lack a well-articulate list of them. To that end, I've taken at stab at starting a list. Why? Simple: I found myself needing such a list last week to help a client think about their company differently.

This list isn't perfect or complete. Some a exactly right. Some are right in spirit but the articulation is off. Some may just be off all together.

Add and adjust please.

Google:
Do no evil.
Golden Coral:
Everyone deserves a good meal.
Major League Gaming:
Everybody plays.
Apple:
Technology should be intuitive.
Cranium:
Everyone deserves a chance to shine.
Etsy:
People who make things deserve the opportunity to make money.
Flickr:
It should be easy for people to share their photos with people.
Innocent:
Being healthy should be easier.
Nike:
Nothing should hold back the human spirit.
Method:
Cleaning products should be clean.
Virgin:
Make the most of every minute
Lexus:
You can always improve.
Patagonia:
People and nature should live in greater harmony.
Target:
Great design should be affordable.
Dove:
Confidence is real beauty.
Haagen Daz:
Nature is the tastiest cupboard.
Whole Foods:
Great food makes life great.
Good Energy:
Energy conversation should be more rewarding.
Mini:
Driving is fun.

How Indie Rock Got Whiter

2007-10-29T11:47:00.001-04:00

Indie band Wolf Parade - one of my favorites.

"Why did rock and roll, the most miscegenated popular music ever to have existed, undergo a racial re-sorting in the nineties?"

That's the question Sasha Frere-Jones explores in her New Yorker article, A Paler Shade of White.

"Brian Wilson, of the Beach Boys, a tremendously gifted musician who had at best a tenuous link to American black music, became indie rocks' muse. (Two currently popular indie acts, Panda Bear and Sufjan Stevens, are well schooled in Wilson's beatific, multi-tracked harmonies, which evoke the sound of glee clubs and church choirs."

Innovation's Algorithm

2007-10-26T13:22:00.001-04:00

Yesterday, I finished the must-read book: The Origin of Wealth. (Thanks go to Jon Leach for recommending it to my lazy ass many months ago.) Origin is a brilliant tapestry of intelligence that has inspired several forthcoming posts.

This particular one deals with the algorithm of evolution.

Algorithm?

Eric Beinhocker, the author, posits evolution is an emergent property of the complex adaptive system – which we call life – comprised of seven inputs:

Design Space: Represents the infinite number of permutations an organism can undergo. Organisms are inherently modular. Their genes can be combined in an incomprehensible amount ways to produce new forms and variations of life.
Building Blocks: These are the modular pieces that combine to create all the possibilities in the design space. Example: genes are building blocks of life.
Schema: This is the coding of designs. A schema represents any possible design, based on a specific configuration of building blocks, in the design space. In other words, a schema is the blue print for one specific design. The rule book in baseball is a schema. The instruction book that comes with your Ikea furniture is also a schema. Both provide you with the necessary rules – often if/then statements – to build a particular schema. In biology, this is DNA.
Schema Reader: This is the mechanism that converts the theoretical designs represented by the schema into the actual entities that exist in the real world. In biology, this is a bird’s egg or a mammal’s womb. Continuing with the previous Ikea example, the schema reader is the new owner who must read the instruction booklet (schema) and build the furniture piece.
Interactors: Interactors are the designs rendered from the design space. For example, this is a newborn child. Interactors compete with other interactors for resources.
Environment: This is pretty straightforward. This is the context in which the interactor is placed.
Fitness Function: The constraints in an environment create a fitness function. Think of it as the criteria for surviving in a given environment. Genes that meet the fitness function are called “fit genes.” Fit genes are replicated. Unfit genes are not. An interactor can never be perfectly fit. A fitness function is a moving target because it changes as the environment changes.

These inputs, as the author notes, combine to create an algorithm that “searches the design space for all designs that are fit.” In other words, evolution is a recursive rule-writing process used to find all effective solutions to complex problems.

Which brings me back to my The Hacking of Modern Marketing posts.

In those posts, I posited innovation was a recursive process of rule-manipulation. The process I laid out was as follows:

STAGE 1: Normal Rules Define the Initial Condition
All life is defined by a set of normal rules (binary code, physics, DNA, political constitutions, religious commandments, social norms, etc.). These rules – typically absolutes – dictate the present shape, thinking and/or behavior of a subject.

STAGE 2: A Crisis Emerges
Eventually, these normal rules hit a wall – a problem – presented by their environment they cannot solve. The outputs of these rules are incapable of overcoming the challenge.

STAGE 3: Rewrite
Rules are rewritten so the entity can behave differently and overcome the problems posed by its environment.

STAGE 4: Trend
If you progress away from the initial condition, you have to move towards something. But progress doesn’t have a destination. It simply has directions. Five of them:
1. Specialization – Degree of adaptation to a special function or environment.
2. Socialization – Ability to cooperate with other organisms and share in mutual benefit.
3. Complexity – Ability to perform increasingly complex activity.
4. Diversity – Ability to exist in a variety of form.
5. Ubiquity – Ability to exist in more places, over longer periods of time.

I then parlayed this raw understanding of innovation into actionable stages that a person would be able to follow:

STEP 1: Identify the normal rules defining the current state/behavior of the subject (subject being society/culture, category, client, consumer group, product, product packaging, medium)
STEP 2: Identify the crisis: the challenge presented by the environment which the subject is incapable of solving due to its normal rules.
STEP 3: Identify which of five trends the subject wants to progress in and/or needs to gain more of to overcome the challenge: Specialization, Socialization, Diversity, Complexity and/or Ubiquity.
STEP 4: Identify the weak normal rule(s): the specific rules preventing progress and challenge resolution.
STEP 5: Work with entire team to write possible new rules that create a “powerful positive good:” progress and challenge resolution.
STEP 6: Agree on a new rule(s) and bring it(them) to life along all the dimensions/actions of effective marketing: invite, enter, engage, commit, depart and extend.

I didn’t realize it at the time, but essentially I was writing an algorithm. All the necessary inputs Beinhocker details are represented:

Building Blocks: This would be the rules.
Design Space: Design space is a given in any complex adaptive system. In this case, there are an infinite number of possible combinations since there an infinite number of rules one can write.
Schema: This would be the strategy (a chosen arrangement of rules) selected by the strategic part of the marketing/creative/management team.
Schema Reader: This would be the execution focused part of the marketing/creative/management team.
Interactors: These would be the executed ideas themselves which, like any interactor, compete for resources: attention, airtime, money, man power and so on. Like interactors, these executed strategies/ideas live or die in the marketplace.
Environment: This is always a given as it is whatever environment the initial object finds itself in.
Fitness Factor: The crisis the interactor currently faces and the weak rules that hinder its performance. The right combination of rules creates what I called, “challenge resolution.” In other words, they meet the fitness factor.

The important characteristic about my rough innovation algorithm is who carries it out. Typically, algorithms are mathematical formulas carried out by a computer (i.e. Google Search). But my innovation algorithm is meant for humans to carry out. As Adam Crow said, “People are the killer app.” To put it in Adam’s framework, this algorithm is the innovation-generating plug-in for the human computer and human network.

I admit, though, this algorithm isn’t perfect. Tweaking is, as always, necessary.

In fact, The Origin of Wealth points out an important step – or maybe it’s a consideration – I left off of my algorithm: multi-strategy exploitation.

While evolution is an algorithm for exploring a data landscape and turning that data into information, it is not a formula for predicting the future.

Because evolution can’t know what will survive, it creates a variety of interactors within the same environment – think about all the flora and fauna in the rainforest. Those better suited for the environment thrive. Those won’t aren’t die. The point is this: evolution does not pick one design. Instead, it casts a wide net to discover which combination of rules (designs) thrive given the fitness function. The unfit rules are suppressed while the fit rules receive more attention from evolution. In other words, they are replicated.

Beinhocker says companies are often their own worst enemy when it comes to innovation: “there is an inherent tension between the need to explore and innovate and the need to exploit and execute.” He continues, “Successful, efficient operations require focus and discipline. They require clear leadership and direction. In contrast, an evolutionary strategy requires tolerance of people going in different directions at once and experimenting with risky ideas…Thus, the drive for operational efficiency, while a necessary and worthy goal, often has the unintended side effect of lowering the diversity of strategic experiments and the company’s stock of internally competing ideas.”

Companies, just as nature does, must balance innovation’s need for exploration and business’s need for exploitation.

Beinhocker suggests companies should again take a cue from nature: select several strategies to execute. In other words, he suggests they develop a portfolio of ideas and/or strategies. (This is something IQ mentioned in his white paper and Jason suggested a millennium ago.) Just like a financial portfolio, strategic and idea portfolios should be diverse. To this end, Beinhocker offers three dimensions with which to select strategies/ideas:

Risk: Risk refers to all the uncertainties that can affect the outcome of a strategic experiment, and the degree of irreversibility.
Relatedness: Relatedness refers to how close or how far the experiment is from the experience, skills and assets the business already has.
Time: Time refers to the expected time to pay off from the experiments.

I’d throw in one more:
4. Variability: Variability relates to how close the strategic ideas resemble each other.

As Beinhocker points out, a common retort is not every company can afford to pursue six strategies at once. To quell concerns, he offers the example of a young Microsoft who at the time of the story was $346 million minnow which made it by far the smallest and most resource constrained of it competitor group. In the story, Microsoft pursued not one strategic path, but six. As they went down parallel paths, they learned what the fitness function of the environment was and discovered while strategic path was most fit. The rest is history.

***

Our natural world and our economic world are not complicated. They are complex. More specifically, they are complex adaptive systems constructed from the interplay of individual participants, institutions and exogenous factors. The result is a complex world where complex problems emerge.

The problem is humans are not very good at complex problem solving. Our brains are better equipped for approximations. We are great at story telling and listening. Instead of computing all possible scenarios and consequence of our potential decisions, we navigate the world through the use of rules of thumb and pattern recognition. Complex computation is not our forte – that’s why we developed math and computers.

Yet many of us still face complex problems everyday that cannot be solved by a few key strokes on a computer or a few stroke of pen in a math equation. Certainly, we can do better than rules of thumb and pattern recognition.

For this reason, Eric Beinhocker believes human organizations can benefit immensely by taping into the multibillion-year-old R&D department called nature to bring its software – evolution – in house.

The innovation algorithm I laid out above and in my Hacking of Modern Marketing is my attempt to do just that: create an evolutionary-based human-software program that can solve complex problems.

Quotes for Planners

2007-10-23T16:17:00.000-04:00

"Failure is our most important product."

Robert W. Johnson
Founder, Johnson & Johnson

Imagination Amplifiers

2007-10-22T13:24:00.000-04:00