Courting herd

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I am totally confounded by all this talk of impending recession, liquidity crunch, inflation and all things catastrophic.  Sometimes I think, ”Gawd, will there be an economy when I wake up tomorrow?”

 

I am not saying this is all babble.  But what annoys me more is that nobody tells me what to do or how to cope.  Tell me `this is your last day on earth’ - there is some finality to it.  But clearly that’s not the case because nobody has a clue what it is going to be like.  Nothing is clear.  But they still twaddle. 

 

So, left with no options, you follow the herd.

 

There is a tendency for business leaders to mimic their peers: following the herd is a safety mechanism. Should the herd start running, one instinctively follows, regardless of the threat. More often than not this makes sense, unless the threat has changed but the herd responses have not.  Herd behavior thus is of limited merit in a rapidly changing environment. In any case, herd theorists will no doubt be aware that those who choose to follow the group spend most of their time wading through the mire.

So we see talk of innovation and competitive advantage instantly replaced by sustainability and survival. “Bringing costs into line with revenues” becomes the new mantra.  But what if this impending recession is actually one of a series of seismic adjustments that can be attributed to inevitable realities such as globalisation or the web? If so, then simply battening down the hatches until the storm blows over is at best a tactical response and at worst one that might permanently damage an organisation’s ability to cope with turbulence.

Enlightened business leaders will see economic clouds as an opportunity to steal a march on their competitors.  The fact that it is unclear when there might be a return on this innovation investment should not be reason to abandon it – periods of inactivity do not just halt progress, they reverse it. Fair weather innovators, like fair weather athletes, never reach their full potential.

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Strategic innovation tip: Forget, Borrow and Learn

 

“To turn a powerful idea into a successful business - Forget, Borrow, and Learn.”  [Bolds are  mine] Authors Vijay Govindarajan and Chris Timble in the Ten Rules for Strategic Innovators: From Idea to Execution.

 

“Forget assumptions, mind-sets, and biases from the traditional core business, because a new business (as opposed to a business extension) must be fundamentally different from a company’s traditional core business. Borrow assets like existing customer relationships, distribution channels, supply networks, brands, credibility, manufacturing capacity, and technological expertise from the core business, because those assets confer a significant advantage over entrepreneurial startups. Learn to make ideas — some of which may not be new — work together in ways that are fresh to your industry. And learning quickly minimizes the time to profitability, lowers risk exposure, and maximizes the chance to overwhelm the competition.”

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Very well said.  There is always a hangover from an earlier something that we unconsciously inherit and implant.  So long as it is a perfect overlay (say accounting method, inventory control or even a security system), it doesn’t matter. But mostly we inherit a lot of practises from the past unrelated business that is ill-suited to the new outfit. 

 

I have experienced it.  I was working for a family owned full service media & advertising outfit where the management consisted of two sons and the father.  The sons had developed the business along the modern methods and practises.  But the father, coming from sugar industry took charge of HR and Administration and started running it like he did the blue collar workers in a rural sugar mill.  Soon the geezer became the butt of all jokes in the office (even the chauffers ribbed him). But the major downside was that the agency lost quite a few good people that found him way too meddlesome - including a few top dogs. 

 

Have you had similar run-ins with such dim stereotypes?

 

can customer feedback alone drive innovation?

Good friend S.Swaminathan, CEO of Cequity Solutions draws attention to some takeaways from Gartner2008 CRM summit.  As Swami puts it, nothing earth shaking or new in there.  Analyst firms have always been predictable.

I’ve my comments under that post – particularly on (customer) feedback induced innovation processes – and explained why “enterprise insiders” have a larger role to play than customers in improving customer experience.  I had cited the Nokia example – its early customers have been pretty much content with the mobility feature offered by the wireless handset and had never asked for images, videos or data streams that were volunteered by the enterprise.  Had they tweaked the handsets on the basis of customer feedback, we would still be holding phones that looked more like a female sex toy (with its sprouty antenna) than the sexy multi-utility device that it is today.

Innovation has to be based on original and utilitarian insights that saturate a given or potential market need.  So the bets cannot be merely on customer (feedback) data because they have limitations.  They also suffer from weak sample sizes and visionary limitations of the customer.

A better metric I think has to come from a blend of customer and insider insight.  The enterprise insider (management, employees, suppliers, service providers besides customers) has the maximum touch points with the product/service than the customer.  While the insider looks up to the enterprise for his livelihood, the customer has wider options.  Humans do not mess with their livelihood and keep thinking about it a lot more than a customer would.  That deep and lasting connection and always-on thought process puts the insider in a position of significant advantage to draw insights.  Unfortunately insiders (other than R&D, Process or Marketing) have no canvas to jot it down, much less to get heard.

Don’t lose’em. Build your Business Intelligence around customer as well as enterprise insider.  You never know whose idea will fly !!!

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Elitism parading as virtue

That’s Ratan Tata towering over Rs.1 lakh car ($2,500 ) - the Nano - launched yesterday, when the whole world sat up and took notice.  Amidst the ooh’s and ah’s, there were quite a bit of `how could Tata do this’ gripes from the burgeoisie.  Even as management guru C.K.Prahlad marveled at Indian engineering feat and called it a leap into future, the neo-elites were soon to forecast clogging of roads, parking nightmares, pollution etc., etc. Here’s Swaminathan Aiyar giving it back.

“Sanctimonious greens call the Nano disastrous because of its affordability— millions more will now clog roads and consume more fossil fuel. This is elitism parading as virtue. Elite greens own cars, but cannot stand the poorer masses becoming mobile, since the consequent congestion will eat into the time of the elite!”

I would rather this family switch to Nano soon and be safe. They get ported on this Rs.45k ($1,125) motor cycle, just because that guy in the saddle finds a small car costing not less than $7,000 way too expensive.

So, what would you call those who bemoan the Nano…?  Neo-Elitists or Pseudo activists..?  If Nano would cause traffic problem, it’s because the roads are narrow.  Go, widen them.  Add on flyovers.  But don’t halt the Nano.  It offers many a happy family a comfortable, safe ride.  And for people like me, enormous peace of mind when we see them inside the Nano, even as I am held up in a traffic snarl for a few more minutes with Nanos all around… I am ok with that !

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Like hell, it’s chutzpah…

Celebration of Indian innovation and enterprise can’t get better than this.

The Economist –

“RATAN TATA, chairman of the Tata group of companies, has a cerebral and cordial manner. But the so-called “one-lakh car”, which Tata Motors unveiled in Delhi to a rapt public on Thursday January 10th, is a product of impatience and chutzpah. Instead of waiting for the great swell of prosperity in India and elsewhere to create millions of customers for his company’s products, Mr Tata has decided to wade out—further than any one has gone before—to bring a car to them.”

I would drink to that..

Patenting se(x)nse

I was recently commissioned by a startup client engaged in biotech research to explore the possibility of patenting its new discovery.  As we were discussing it, I realized that its claim for innovation looked more incremental than generic. Though it’s not my business to argue with the subject matter experts, to highlight what occurs to me as an error apparent out of my not so short experience is indeed part of my job.

Currently, India allows patents [on derivatives] for incremental innovations in which the efficacy has significantly increased. But if one is making a tablet of a product and then develops a paediatric dosage by way of a serum, this is not innovation because any person skilled in chemistry knows how to make that. There is no invention or innovation on that and permitting this sort of patenting, would mean evergreening. Or take usage - a drug which was used for epilepsy was granted a [second] patent for obesity. Do we want such new uses to be patented?

On hearing this, the Research Head grew wild.  He started quoting recent examples of how liberal the US patent laws have been in granting patents even on minor variations.  Rather he started using this as one more tool to blame the favorite whipping boy - the Indian IP laws – the laxity of which allows widespread counterfeiting on almost everything from valuable formulations to movie CDs.

If it were, does it augur well for the Industry and Public health? Patents granted for such devices, for such “inventions”, would derail innovation and would be detrimental to the progress of science. Research labs would focus only on these low-hanging fruits, which are low risk and high reward. This is why we have section 3(d) of the Indian patent law on incremental innovation. If everyone can patent small changes, why would anyone go in for high-end research? There, the fruits are at the top, where risk is high and rewards are uncertain. If we want medical science to progress, that is what should be the bar.

We have seen the high prices of medicines, which are off-patent but still have a single source of supply. Patents will ensure that there is only a single source of supply and the pricing power remains concentrated. Not many would like to let go off that handle, don’t you agree ?

I was drawn to a facetious metaphor at this point which I thought aloud. Imagine if Vatsyayana, the author of Kama Sutra, lived during our times and had been allowed to patent his “inventions” (which are essentially techniques and creative postures that maximize pleasure in an orgy), you would be ending up paying Royalties to him each time you climax.  Worse if you don’t since you face a the prospect of having to prove it before a judge that you did `it’ differently !

I think that was the clincher. Sex not just sells, makes sense too. After some lengthy conference calls with my friend, a famous patent attorney that confirmed my observation, grudgingly they relented. While on my way back, I realized I had saved them quite a fat sum by way of attorney fees (should have dawned on them much later) when I was browsing thro the meeting docket in which there was an estimate of attorney fees. Hmmm…I’ve been foolish enough not to have factored in these tangibles while offering my quotes.  I resolved to be careful with my quotes in future !

Some good reading material on the subject here and here. 

Try the next cool thing instead !

I have often found startup entrepreneurs claiming “we want to be the Amazon in ……..space, we will be the Google in …….space” etc.  Modeling businesses after these success stories are alright so long as the desire to replicate does not crowd innovation out, which is the holy grail of startups that earned them that distinct reputation.   

The advantage of being a startup is that you don’t have too many rules to follow or approvals to take for doing what you think is right.  The freedom liberates you from constrictions, results in creativity that is the springboard of innovation.  When you are conscious of your thoughts and actions every moment, you will never slip into forming judgments. You simply don’t need to do what Google or Amazon did to succeed.  Why not be a benchmark yourself at something new instead of building the  brand equity of others ? 

The trouble with being judgmental is that our preconceived notions distort actual vision of life. When all our thoughts are centered around a predisposed state of mind, we see only what we wish to see or how we want them to be instead of how they are. We modify facts of our observation to suit our perception.  To relate it to a daily event, when we meet a person, we form a judgment about the person and then we collect facts that support it ; those which don’t conform are rejected.  Clearly, the casualty here is objective assessment.  That’s why being judgmental sucks.  

I often learn a lot from kids.  Kids never have fixed ideas about life or how it ought to be.  That’s why they are always cheerful and full of smiles.  All things are new for them and never take anything for granted.  They live fully every moment and they fear nothing. They don’t look at other happy kids to delight themselves. They give themselves joy by accepting things around them as are.  It’s ironic and indeed sad as we grow up, we trade a lot of useful natural instincts in for acquiring all that junk.  

While forming the startup idea, drop all your prejudices and opinions and look at the problem that you wish to solve. Find out what’s wrong with the solutions that already exist or what could be done to improve upon it. Analyze the pain points of users of a bad product or service and learn from them how they wished it were. Soon you’ll understand a thing or two about user perception and will tend to design only things that are user friendly.  

I don’t mean you stop marveling at yesterday’s heroes. It’s your turn to build the next spectacle for the rest of us !

All about ideas

When you ask a creative person how they did something, they may feel a little guilty because they didn’t really do it, they just saw something. It seemed obvious to them after awhile. That’s because they were able to connect experiences they’ve had and synthesize new things. And the reason they were able to do that was that they’ve had more experiences or have thought more about their experiences than other people have. (Steve Jobs)

Our memories do not mirror our real life experiences, but an aggregation of many bits and pieces. In fact what you think as `the idea’ could be a blurred image that your mind captures as you focus on something. That’s precisely what you should catch on, think through, submit to analysis till it gets to be a presentable concept. You may still like to add to it as it may not be perfect, but there will be less to knock off.

Normally it is said that people get their best ideas not while at work – they get it at a picnic, in the car, in the shower, in the bed etc. So the trick is to make sure those ideas don’t escape. They’re valuable ideas that come to you for free when you least expect it. But if you’re prepared, you can capture the little scamps and use them later.  Always remember to jot them down as soon as they occur.

Sometimes the best decisions are made when you’re most tired: raw, unfettered emotions come through, not burdened with the lattices of straining to put too much effort into something that’ll ultimately result in nothing. And it’s not just merely about speaking your mind, either, but expression unkempt by cliched “I tell it like it is”, the way an icebreaker smashes through blocks of solid water. No, this is better: you’re telling it how you wish it to be.

Our brain has two basic phases during the innovation process**

1) Generating ideas and 2) Evaluating them.

Most of the time, when we’re innovating, we’re doing both parts at the same time. First one, then the other, in that sequence all in split second.  Even for a simple decision whether to go out for dinner or cook at home, the process is the same.  So our brain is almost always at work, generate idea, reject, reject, reject, if accepted > evaluate, reject… It’s not a comment on the ratio of the quality of ideas we get. It’s got more to do with our ability (or the lack of it) to incubate and process every idea that crosses our mind.

What happens to the generative side of the process is that it gets fed up with being rejected all the time. And that’s just in our own brain. Imagine when we add the entire team to the equation ! Lots of ideas, lots of people shutting them down, and then eventually the group stops suggesting ideas and innovative thoughts.

One way to eliminate the idea shut down is to deliberately separate our generating from our evaluating. Otherwise, it’s like trying to drive with one foot on the accelerator while the other foot is on the brake. You’ll make a lot of noise, but you won’t go anywhere. It’s tough on the car.

It’s easier said than done, so use these deliberate rules when you’re generating and evaluating:

GUIDELINES for GENERATING: *

1. Defer Judgment — you can judge the ideas all you want… LATER! For now, just keep them coming and write them down!

 2. Strive for Quantity — set a quota for ideas and don’t stop until you get there. Even  then, don’t feel the need to stop generating! For simple issues, go for at least 30 ideas. More for complicated problems. When you generate lots of ideas, you’ll get lots of great ideas. Quantity yields quality. Of course, you’ll get lots of bad ideas, too, but don’t worry about them until you start judging. But not yet!

3.  Seek Wild and Unusual Ideas — Seek out wacky ideas. Actively try to find them. Because they stretch your mind. They force you to look in new corners of your brain where you’ll find some odd ideas that might not be so outrageous when you tone them down a bit. It’s easier to tame a wild idea than to invigorate a weak one.

4. Combine and Build on Other Ideas — It’s not enough to just generate a bunch of ideas unless you can build on them or fit ideas together that offer new possibilities. As you’re generating, keep playing with ideas to see if you can let ideas spark off of each other to create new ones.

GUIDELINES for EVALUATING: 

1. Use Affirmative Judgment — Instead of pointing out all the ideas in which you don’t see merit, focus on the ideas that are potentially valuable. Look for the good. Don’t point out the bad. Never mind the ugly.

2. Be Brave: Consider Novelty — When evaluating ideas, it’s too easy to fall back on the safe ideas you’ve tried before or that you know have been done before. But we’ll soon realize, innovation doesn’t come from golden oldies ideas. They come from bold, fresh, new, novel ideas. And that’s sometimes uncomfortable. So focus on looking for them.

3. Stay on Target — As you evaluate ideas, remember what you’re trying to accomplish. What was the original objective? Keep that in mind when you’re reviewing ideas. Otherwise, it’s easy to go off on tangents without getting what you want. Like the saying goes, “when you’re up to your butt in alligators, sometimes it’s easy to forget that you started out to drain the swamp.”

4. Keep Focused — It’s easy to see one idea and latch on to it, excluding all of the other great ideas that you generated. Watch out! Force yourself to be patient enough to explore each and every idea and ponder it’s strengths before moving on to evaluate the next idea.

If you can’t remember all that, remember this; to generate new ideas, you have to be able to defer judgment and open your mind to new ideas. And to evaluate new ideas, you have to open your mind to new ideas. Otherwise nothing gets through but old ideas. Now, how innovative is that?!

*With thanks to Alex Osborn, from his book, “Applied Imagination”

**permitted by : newandimproved.com newsletter

Idea worries…!

I have tossed many ideas from my entrepreneur clients to the angels in my network.   I normally prefer an interface for my client with the Angel directly to  make his / her  pitch.  Sometimes such interface happens without my personal involvement.    A week later,  I get this call from the client asking me whether I got any response from the Angel.   Deep inside I  sense the pitch hasn’t worked.   On checking it out,  it turns out that beyond the sketchy power point presentations,   the Angel is left with nothing on the idea itself.   Mostly entrepreneurs are a paranoid lot and they are quite rightly so.  It’s quite  possible  that an idea may get hijacked.   But then at that stage of your business,  an idea is all you’ve got to offer.  You can intelligently couch it but not conceal it altogether.   And if you ever thought an Angel would sign an NDA for hearing your idea,  you better go hatch yourself.

So I thought,  let me put this up for future. 

Angels normally invest on people and their ideas collectively – not on any one of them.  Moreover,  ideas are not the business itself.  They keep evolving as you move along the execution curve.  It’s not uncommon that an original idea entirely transforms  into a totally different something while getting executed.  It may be due to reasons of executional difficulties your team faced or for the more practical reasons like shift in market trends, access to better technology or skillsets.   While the idea is important to be guarded,  it’s not something that one should be unduly worried about.  Here’s something that I came across on ideas. 

If you keep your secrets from the market, the market will keep its secrets from you — entrepreneurs too often worry about keeping their brilliant secrets locked away; we should all worry much more about springing a surprise on a disinterested market .   To quote Howard Aiken: “Don’t worry about people stealing an idea. If it’s original, you will have to ram it down their throats.”  

Pay attention to the idea that won’t leave you alone — this is taken from Paul Hawken’s Growing a Business. Sometimes an idea catches hold of you and you find you can’t put it down. Pay attention to that! Just start working on it. Can’t get yourself to do anything on it? Move on. Find yourself waking up out of bed to write down new ideas about it? That’s a good one to choose.  

Immediate yes is immediate no — does everyone immediately tell you your idea is great? Run away from it. If the idea is that obvious, the market will be filled with competitors, and you’ll find yourself scrambling. One good test : when the popular searches throw up its list of  “great startup Ideas” and if your idea is figuring in there – dump it.   You’re already too late.  

Build what you know — this is the most basic advice of idea generation: scratch an itch you have yourself.   To make a great company,  stop and ensure that your need is broadly felt, and that your solution is broadly applicable — not everyone spends their life in front of a computer, remember.  

Give people what they need, not what they say they need — interviews are tricky. People will swear up and down that they would buy a product you describe if only it were available,  and then fail to do so as soon as it is.  Likewise,  in conversation an idea can sound terrible,  but in actualization the idea can become a compelling product.   You have to sherlock out the truth of the interest   people express,  and “yes/no” questions are usually less useful than “how much” or “how bad” questions.  

Your ideas will get better the more you know about business — engineers hate to hear this, but you can generalize up quite far from here:  the more you know about everything,  the better all of your ideas will get!  If you want to start a business and your strength is in development,  learning about pricing, sales, marketing, finance, and yes, even HR, all of it will make your product ideas stronger and better.

How to drive innovation in India….!

Human ingenuity and innovation is always valuable than physical resources.  This has been confirmed by the findings of two Harvard Economists, Sachs and Warner who studied 97 countries over two decades to understand what drove economic success of nations.  To their surprise,  availability of abundant natural resources actually correlated negatively with economic success.

Look at India.  Today India has already established itself as a leader in process innovation between the IT industry that has redefined excellence in IT and knowledge processes  and the pharma industry in the generic space.  These innovations sparked a sense of optimism, that has motivated the entire country willing to invest and consume.  Coupled with a GDP growth of 8% and a runaway sensex, an increasingly dominant knowledge economy - tempts one to believe that we are at the end of the road.

The reality is we’ve only seen the first generation of process innovation and yet to embark on serious product innovations.  Coming at a serious cost,  to stay the course of innovation it takes a strong social consensus.

Major drivers for Innovation

Force of Competition, without doubt is a major driver.  Today in India, it’s the young companies that drive innovation.  That’s because they don’t attempt to become the next `Google’ or `Paypal’.  They just go ahead, try and give something new to the world.  It works.

Effective R& D coordination - between universities, government funded research centres, corporations and startups accelerates innovation.  Working cohesively with a great deal of focus,  this is a surefire support.

Individual commitment - Recognise the biggest sin of all is inadvertence.  Not being fully awake.  The future descends equally on everyone,  but some notice it faster because they are always pushing the limits of their knowledge, asking questions and picking up on weak signals.  Keep your eyes and ears close to the ground to hear its rumblings. 

Intelligent bets - You have to be willing to place intelligent bets, and give up the smoothness of predictability for the non-linear upsides of intelligent risk taking.  Not all bets will lead to success but there’s hardly any safety in passivity either.  We need to have the self confidence to set a direction but not the arrogance to fight the need to change if market conditions so require. 

Goal setting -  Agreed we have constraints of infrastructure and resources.  Never let that restrain our ambition and allow self imposed limitations to make us aim too low.  Go figure how to get over them.  Trust me, people already have.

Between knowledge power, the local market as incubator and a burning ambition,  India has the potential to be among the world’s leaders in Innovation.  The world is waiting.