lead/marke | ralf schwartz

[L/M NET] Tim Kastelle: "Your Customer Isn’t 'Everyone' - Seven Innovation Thoughts Triggered by Peter Drucker"

2012-02-24T10:08:06+01:00

(L/M NET: the blogged experience & expertise of some of the best minds in Innovation, Brand Engagement, Communication Agility:
Tom - Tim - Konstantin - Helge - Drew - Charles - Anthony - Adrian)

Of all the management writers I’ve read, Peter Drucker probably generates more interesting quotes per page than anyone. Tom Peters and Joseph Schumpeter come close too. Here are six thoughts triggered by reading his book Management Challenges for the 21st Century:

"And yet very few institutions know anything about the noncustomers—very few of them even know that they exist, let alone know who they are. And even fewer know why they are not customers. Yet it is with the noncustomers that changes always start."

Drucker is making a slightly different point here – that we need to look outside of our normal networks to innovate. True. But also, your customer isn’t “everyone.” Even Coke has more noncustomers than customers in the world. A big part of strategy is making the choice of who your customer will be. This choice is based on value, however:
"The starting point has to be what customers consider value. The starting point has to be the assumption—an assumption amply proven by all our experience—that the customer never buys what the supplier sells. What is value to the customer is always something quite different from what is value or quality to the supplier. This applies as much to a business as to a university or to a hospital."

Innovators often don’t know what their idea is for. This is a strong argument for two things: empathy and experiments.
"Everything improved or new needs therefore first to be tested on a small scale, that is, it needs to be PILOTED. The way to do this is to find somebody within the enterprise who really wants the new. As said before, everything new gets into trouble. And then it needs a champion. It needs somebody who says: “I am going to make this succeed,” and who then goes to work on it. And this person needs to be somebody whom the organization respects. This need not even be somebody within the organization. A good way to pilot a new product or new service is often to find a customer who really wants the new, and who is willing to work with the producer on making truly successful the new product or the new service."

New ideas need champions. This is a critical part of piloting or prototyping, which in turn drives experimentation. This is one of the best ways to find out what customers actually value – testing.
"Every organization operates on a Theory of the Business, that is, a set of assumptions as to what its business is, what its objectives are, how it defines results, who its customers are, what the customers value and pay for. Strategy converts this Theory of the Business into performance."

Theories of Business need to be tested – this is how to design the experiments. Start with the assumptions in your business model, then test them to see if they are true.
"An entrepreneur who does not learn how to manage will not last long. A management that does not learn to innovate will not last long. In fact, … business—and every other organization today—has to be designed for change as the norm and to create change rather than react to it.

The main reason is that a policy of systematic innovation produces the mindset for an organization to be a change leader. It makes the entire organization see change as an opportunity."

The consequence of this is that innovation is a process, which can be managed.
"The first change policy, therefore, throughout the entire institution, has to be Organized Abandonment. The change leader puts every product, every service, every process, every market, every distribution channel, every customer and end-use, on trial for its life. And it does so on a regular schedule. The question has to be asked—and asked seriously—“If we did not do this already, would we, knowing what we now know, go into it?” If the answer is “no,” the reaction must not be “Let’s make another study.” The reaction must be “What do we do now?” The enterprise is committed to change. It is committed to action."

If we were starting today, would we do this? This is the blank slate approach described by Jeffrey Phillips, and it is an important tool for evaluating your business model.
"To try to make the future is highly risky. It is less risky, however, than not to try to make it. A goodly proportion of those attempting to do what this chapter discusses will surely not succeed. But, predictably, no one else will."

Or, as Wayne Gretzky said, “You miss 100% of the shots you don’t take.” You improve your chances of succeeding by systematically looking at the drivers of innovation opportunities.

Here it is in a nutshell: Innovation drives change, and change drives growth. We can’t know in advance what will work, so we need to use experiments to discover what customers value. It’s risky, but less risky than doing nothing.

(ralf says:
How to comment on this? With just another quote!

8. “People who don't take risks generally make about two big mistakes a year. People who do take risks generally make about two big mistakes a year.” - Peter F. Drucker)

Tim is a lecturer at The University of Queensland Business School. He researches, writes, teaches and consults on topics relating to effective innovation management, with an emphasis on studying innovation networks. He blogs at The Innovation Leadership Network. Twitter: @timkastelle

The Ultimate Brand & Business Challenge: The Digital Dump

2012-02-22T05:57:26+01:00

Via GOOD. Click for a larger view.

BecomeCareer: Geek vs. Hipster Infographic

2012-02-22T05:25:33+01:00

Via becomecareer. Click for a larger view.

Innovation Needs a Focussed CEO

2012-02-19T14:31:26+01:00

"... Trying to implement more innovation is noble, but requires a lot of work, work that will distract the business from its normally efficient, effective processes.

Middle managers who’ve spent years developing robust processes to achieve short term financial success are loathe to see their work go to waste and don’t want to distract their people and processes from what they do best.

Thus, the importance of “focus”. If CEOs really want innovation, they must focus, focus, focus on innovation. A one time off-handed request for more innovation simply won’t create much change..."

Via innovationexcellence.

Please read Misserfolgsstrategien alter Männer, and Mark Zuckerbergs Erfolgsregeln, too.

Mark Zuckerbergs Erfolgsregeln @wiwo

2012-02-15T10:30:00+01:00

Ich habe in unserer Wiwo-Kolumne mal etwas zu Mark Zuckerberg, dem Netz und der Dringlichkeit des Wandels für alle anderen geschrieben: Mark Zuckerbergs Erfolgsregeln.

Four Comscore Videos: Future of eCommerce, Mobile, Online Video, Social Media

2012-02-12T11:30:00+01:00

Via Comscore.

brandpoems(3): Dear Brand, "If Your Dreams Don't Scare You, They're not Big Enough"

2012-02-10T09:30:00+01:00

Via ralfschwartz. Via workman.

[L/M NET] Helge Tenno > "The next 80% (manuscript to slideshare presentation)"

2012-02-09T14:15:33+01:00

(L/M NET: the blogged experience & expertise of some of the best minds in Innovation, Brand Engagement, Communication Agility:
Tom - Tim - Konstantin - Helge - Drew - Charles - Anthony - Adrian)

The next 80%

View more presentations from Helge Tennø

Intro / gap

- According to Microsoft people have moved on, they have explored and adopted online communication / connected technologies to such a degree that they’re online habits are almost unrecognizable compared to only five years ago.

- Think about that, five years ago most people didn’t know what either Facebook or smartphones were.

- We have to understand that people have an adoption mindset and culture – our history is a history of embracing technology, and then having the technology adapt to us. People have always been on the move, and will continue to do so.

- Contrast this to companies who calculate and protect. Businesses aren’t people, but they have to operate within the same world, they have to understand individuals and apply to their way of thinking and doing. This is where the gap begins, and especially these last five to ten years.

- Today, in the connected environment business can’t hide behind walls and buy their way into peoples lives. They have to connect, react and adapt themselves. And by nature this strides against their very foundation. They are losing control, they are searching for rules and maps that aren’t there anymore. They are trying to adapt the new to the old school and they are having difficulties knowing where to look in order to find tested and proven answers. Instead of embracing the connected business models…

Three things

- In this talk I want to make visible what changed in the last five years and what is interesting about these changes. I’ve categorized it into three parts: simple, meeting place and 20/80.

Simple

- One reason large parts of the corporate Internet is out of tune with its customers – and increasingly the business itself – is that we are unnecessarily complicating it. The Internet should be one thing: simple.

Let med demonstrate with a couple of examples of how even minute tasks get unnecessarily complex online.

- Trying to log into the on-board wifi on the NSB train service you are asked to fill in eight – EIGHT – pieces of information. Why?

- This is the beta demo version of my online bank. Of which only 15% is dedicated to my personal banking. 85% of the real estate goes to marketing, navigation and completely uninteresting bank/crm stuff … Are banks in the business of media channels and marketing, of navigating paying customers away from their core service?

- These are just two small examples, but they are very descriptive of a lot of online strategies. Too much of the stuff we do online is on autopilot, and nobody stops to even ask one question to challenge the status quo.

Paraphrasing Steve Jobs: things look like they do today because people, no smarter than you, said it to be so. The minute we understand this, and that we are in a position to change it, great things happen.

- The Internet is simple, and should be simple. Unfortunately we are thinking of it with the wrong mindset; as something complicated, something that doesn’t work, something we don’t understand: As technology. But, how much do we really need to understand?

- Take a look at other pieces of technology: bread, asphalt, language, bicycle, chairs, faucets. Now do you think about these things as technology? They work and they are, no questions asked. But this is not the case with the Internet, why?

Understanding the nuts and bolts of the Internet is as important to a business as understanding the complexities of the mechanics that goes on inside a faucet when we need lukewarm water to wash our hands.

- Unfortunately the fog of technology diffuses the process of building something meaningful by trivializing the discussions and spending too much time focusing on irrelevant details. When we think of the Internet we are not thinking business models, identity and brand value. We are thinking users (what is a user?), HTML5, responsive design (why would you offer the same service in every situation?), apps or clicks.

- The Internet is fascinatingly simple, if we just stop referencing it as technology and start thinking of it as a loaf of bread – because our customers already are.

Meeting places

- What we have done up till now is limit our thinking of what online can do based on a narrow view of what marketing can do. But what happens when marketing changes, or grows into something bigger?

- Traditional advertising and design has one goal: to deliver a promise, either based on what the consumer wants to become, or what the brand wants to become.

All traditional marketing, advertising and design is built around this core idea: the transmission of an idea creating anticipation towards the use or consumption of a product or service in a given situation.

- Inside this mindset digital offers some abilities that are new, and speeds up some abilities that are old. But in essence digital is nothing more than a technological option – a choice between newspaper, billboard, TV, radio or Internet etc.

- Now, what is interesting is not how digital supplements traditional marketing, but how we create something new outside what is already there.

Online has added a new concept to the marketing universe; the ability for marketing to start proving on its own promise, delivering on expectations – and that is an immensely powerful idea.

- The short black and white version:
Traditional marketing delivers a promise to the consumer, but has never been able to deliver on this promise – this responsibility is handed to the product and business design team.

- But, this has all changed – and we haven’t been able to see it, because we are stuck in a vernacular describing what we create as platforms and technology rather than the consequences of them.

We are not creating websites, applications or services – those are just objects – and this vernacular hides the insight and understanding of how we ad new value to the marketing platform.

- What online has done is something much bigger than offer new extensions to media, or surfaces – it’s creating presence – in peoples lives – we are designing and building meeting places between the brand and the customer. Equal in importance to the product design itself.

- Meeting places are not web services, they are tools to fit different target groups specific needs in order to meet with the promise the brand has made to the person at the other end.

- So, my online bank is not a media platform. It is a connection between the bank and my banking needs. Designed to deliver on the customer promise – to create an unmistakable, recognizable and valuable banking experience…

- The Lego Life of George example understands this. Here Lego uses the online platform to be even more relevant. Giving them selves the opportunity to take part in the design of the situation where the product is being used and enjoyed.

Lego is not treating this as a media platform, but as proof of the Lego-experience.

Eighty percent

- When 80% of what people do online today are things they didn’t know existed five years ago, what are they doing differently? What are their new habits and activities?

I’ve divided this into three parts: net, relationships and activities.

- First; the web is not the net. In fact they are quite different things. The web is similar to what the Internet offered in the mid-nineties; which was a slow burning information super highway. Where the exchange of information was key to all activities and hyperlinking between documents where the fois gras.

Today a large part of the media based Internet presence has become high paced entertainment, content rich hubs, where consumers a whisked around by the grit of their teeth from videos to headlines, photos and comments.

- The Internet is nothing like the dry, factual, controlled and distilled version it was – even if some of it still remains. (The old Internet is still there)

- As an example of this many companies misunderstand the role of their online presence. Treating it as if it was comparable to a physical address. That their presence online has to conglomerate into one destination serving everybody and every purpose.

- Misunderstanding online as destination instead of presence, and not differentiating between information strategy, sales tactics, branded communication or meeting places hinders many companies from seeing success from their online investments today.

For relationships

- The Internet was originally, and still is, a great mechanism for direct response. Being instrumental to a lot of the business value generated directly from the net today.

But, at the same time as it is changing sales and market presence world wide, it is also turning out / developing abilities positioning it as one of the best arenas for connecting and offering a valuable, relevant and present relationship with customers.

The Internet has grown into a platform for cultivating and capitalizing on a new generation of customer relationships.

- To see this we need to understand that the Internet anno 2007 was something added on top of existing business models, business was still similar to the last 100 years of business – just more efficient and global.

But, technology offers to change this. To rethink how any company earns its money, by making available a range of new ways of capitalizing on products or new services offered by the technologization of its offer and the context in which it ads value.

- The New York Times reported on to this back in 2009. Writing on how subscription models where taking over for more conservative buy/sell business models. And how this was a mindset not specific to a certain type of business, but any company willing to creatively rethink how it earned its money.

- Kevin Kelly points to this in his work: That people are starting to realize that what they need is not to own something, but to have access to it. And if business is able to find a way to offer this accessibility people are more likely to pay a smaller, but recurring, fee for it instead of obtaining the object permanently through a one-time costly acquisition.

- The music industry is a great example of this. Where the digitization of content has completely changed the product, from something physical, an object and a symbol on your shelf, to something invisible and abstract. Music has acquired a due-date. And people have become more aware of the cost connected to something as short lived and potentially random. People are increasingly more willing to pay for the access itself, rather than the musical product.

- In the Bakertweet example people are signing up as members of the The Albion Cafe’s tweets in order to gain access to the product when it’s as its best: hot and right out of the oven.

- Nokia Push Burton is creating a digital information and gaming layer on top of the physical snowboarding activity. This is achieved through adding a range of sensors to the clothing and snowboarding equipment, and then connecting these to the Internet and your personal device (mobile or PC). If a snowboarder has generated millions of points, and are competing fiercely with her friends on this online platform, how can she buy a different brand the next time she plans to update her wardrobe or kit?

- What we are seeing here is a solution to the fatigue of the current rational end emotional system of brand loyalty. Caused by indistinguishable offers and brands built on category language not individual personality and disruption.

A solution offered through the digital services portfolio designed to deliver on the brand platform, to identify unmet customer needs and distinguish itself from the competition. A brand proof, not promise: functional loyalty.

Activities

- Thirdly, the Internet, since the beginning, has been all about information; “content is king” and all that. But this is no longer necessarily true. The Internet is only partly an information platform. In fact, as an information platform it even has some clear and present weaknesses.

The more interesting question is not how we can make the Internet better at information, but at seamlessly improving our everyday life? And information is seldom the solution to this, it is much more interesting to look at how the Internet can help us do stuff, our activities.

- We have to question two things:
The screen might be the worst presentation technology for reading. Research has demonstrated that people spend almost twice the amount of time reading stuff on screen compared to paper. At the same time people are less patient and less systematic online. They skip, scan and skim text. Reading fragments from all over the page in no particular order, putting it together into their own system and understanding – rather than the chronologically designed way of reading it that has been laid out by the brand.

- How do brands connect to people? Does it have to be through information? Or can activities and experiences be just as valuable. Do people have to read things to feel connected to a brand, or can doing stuff be just as, or even more, effective.

Online is offering a different way of thinking about marketing. Moving it from a classical information and quantitative approach (where the more time you get with a consumer equals more immersion in the identity and stronger brand impression) to an activity and qualitative approach (where the quality of the interaction is far more valuable than the length of it).

- Dominoes concluded that they did not have the capacity to offer the best tasting pizza and decided on a different positioning strategy: The best at delivering it. Demonstrating their commitment to this promise not by writing about it but proving it through an online delivery application tracking the pizza through the value chain and all the way to the customer.

- Museum of the phantom city is not a brochure, leaflet or book presenting all the imagined ideas and architectural concept for New York that were never built. But an application that lets you walk around the city and see it with your own eyes, through an augmented reality layer on your smart phone.

- The owner’s manual of the new luxury range Exuus from Hyundai is so much more than just a manual.

- Instead of promising superior sound quality through its brand communication Pioneer is (also) proving it through an application helping people achieve it.

Summary

Summarizing this I’ll bring you back to my initial presentation of the three abilities that lie at the root of how the Internet has changed. And hopefully this will allow for us to think and build ideas for an Internet with a broader set of abilities than the ones we built for just five years ago.

The Internet is simple.
Meeting places, not web sites, proof, not promises
80%, from destination to presence, response to relationships and information to activity

- We are not at an end point, we have not evolved for millions of years just to reach the point where we are today. We are continuously changing and adapting.

We need to understand that even if we are still working with the first generation Internet, changes happen all the time, and how people use the Internet in 2012 is radically different from what we did only five years ago – and futurists are predicting even more changes the next three years.

We are at the light bulb stage of the Internet and we are at the beginning of something beautiful…

(ralf says: WOW!)

Helge works as a Planner for SDG, helping brands and organizations discover WHY they are valuable in consumers lives, and HOW they can create deliberate value on the arenas and inside the interfaces where they connect with them. Twitter: @congbo

brandpoems(2): Dear Brand, "Wanting to be someone else is a waste of the person you are."

2012-02-09T09:30:00+01:00

Via nocturnality.

[L/M NET] Tim Kastelle > "Don’t Be First to Market, Be First to Scale"

2012-02-08T09:34:48+01:00

(L/M NET: the blogged experience & expertise of some of the best minds in Innovation, Brand Engagement, Communication Agility:
Tom - Tim - Konstantin - Helge - Drew - Charles - Anthony - Adrian)

Often when people have an idea for a great new product or service, they rush to be first to market with it. We keep hearing about first-mover advantage and how you need it.

The only problem with first-move advantage is that it doesn’t seem to exist. The academic research on the topic shows that there is no such thing.

The first definitive work on this was done by David Teece in 1986 (pdf version of the paper here). He found that innovators capture about 20% of the profits generated by their new ideas. Followers and imitators capture slightly more. Suppliers get some of the benefit, but the big winners are customers, who get about 40% of the benefit of new ideas.

The study was done 25 years ago, but subsequent work has consistently found similar results.

Part of this is because innovations diffuse across an S-Curve – and this usually takes longer than we expect it to.

How can innovators try to capture more of the profits generated by their great ideas? It’s not by being first to market. In his excellent new book Sidestep & Twist: How to create hit products and services that people will queue up to buy,James Gardner suggests that one way to address this problem is use network effects to accelerate the S-Curve – to be the first to scale.

He uses the five factors that Rogers identified as the key characteristics that drive adoption, and reframes them for the network economy. His thesis is that by taking advantage of networks, you can move through the slow part of the S-Curve more quickly. This increases your chance of winning.

The five factors are:

Observability: how easy is it for people to see how the innovation works? In networks terms, does usage increase through viral effects? Think about the social games on Facebook, like Farmville. Every time one of your friends played Farmville, you get an update about it. This continues until you either start playing Farmville yourself, or you block all updates related to it. That’s observability.
Trialability: how easy is it for people to try out the new idea? In a network, trials are experiments. The more people test out your idea, the more likely it is that emergent properties will show up. This is how you find unexpected new uses for your idea, which expands your number of users, moving you through the S-Curve more quickly.
Consistency with how we currently behave: can we fit the new idea into our existing routines? Or does it require us to do new things? The former leads to faster adoption. Within a network, this leads to herd behaviour. Gardner’s example of this is Amazon’s recommendation engine, where the more people use it, the more valuable it is, leading to more people using it.
Relative Advantage: is your new idea substantially better than what it’s competing against? One way to get this is to build in effects where the more people use it, the better/cheaper/faster it gets. Think about Amazon’s recommendation engine again. Or Google. Google wasn’t the first search engine (not even close), so how did it come to dominate? By being substantially better than the others, and by using an algorithm that improved search results the more people used it.
Complexity: is the new idea simpler to use than its competitors? In network terms, does increasing use lead to great simplicity? For this, Gardner talks about how “crowds of people, learning and sharing together, make it less difficult for others to join their crowd.” His example is Wikipedia – which is trying to catalog a huge amount of knowledge. The more people participate in Wikipedia, the easier this gets. And their value proposition improves.

I love the idea of using network effects to move through the S-Curve more quickly. This quick recap doesn’t do the idea justice – it’s worth checking out the book to learn more.

In the meantime, if you are innovating and you are early in the diffusion curve, ask yourself this: how can I take advantage of networks to increase the use of my great idea? If you think about this in terms of the five factors from Rogers, your chances of capturing the value that you create will increase.

So don’t try to be first to market. Try to be the first to scale.

(ralf says:
I 'fear' innovation is still key. But taking the stress out of people is very helpful for businesses and success.

Some great advice. The 5 factors do make it much easier to understand why scalability is important and how to do it. Otherwise the headline remains abstract and clients, advertisers, and agencies cannot follow. Really helpful.

Thinking about adding a pentagon diagram to the back of my mind.)