Transformation Takes More Than Ideas

Stories of innovation usually follow a simple, but common narrative. Someone gets an idea, figures out how to make it work and changes the world. Yet that is rarely how it actually happens. Far more often, someone comes up with a great idea and it never gets off the ground because no one is willing to accept it. Continue reading “Transformation Takes More Than Ideas”

The Platform Fallacy

It seems like every business discussion today is just counting the seconds before the term “platform” comes up. Books and articles are written, pundits swoon and conference audiences nod and exchange glances in knowing agreement. Everyone, it seems, wants to transform their business into a platform. Yet take the argument to its logical conclusion and the message becomes problematic. Platforms, as many have observed, function as multi-sided markets and therefore must connect value to value. So if everybody becomes a platform, who actually creates the value to make a vibrant marketplace? Continue reading “The Platform Fallacy”

You Can’t Change Fundamental Behaviors Without Changing Fundamental Beliefs

In 2006, Blockbuster Video launched Total Access, a service that allowed its customers to rent videos online and return them to stores. The strategy was an immediate hit with customers and before long its online unit was making big gains against Netflix. It seemed that the video giant had finally cracked to code to renting videos on the Internet.

Alas, it was not to be. Investors balked at the cost of the new plan, while franchisees feared that online rentals would make them obsolete. In 2007, the company’s CEO, John Antioco, was fired and the online strategy was scrapped. Just three years later, in 2010, Blockbuster filed for bankruptcy.

Traditionally, we have looked at strategy solely as a set of plans designed to achieve specific goals. However, as we increasingly operate in a world of networks rather than hierarchies, leaders need to learn the lessons of social movements and focus on shared values. As the story of Blockbuster shows, you can’t change behaviors without first changing core beliefs. Continue reading “You Can’t Change Fundamental Behaviors Without Changing Fundamental Beliefs”

Innovation Isn’t About What You Control, But What You Can Access

Completed in 1928, Henry Ford’s River Rouge plant was a marvel of its age. It was almost 100% vertically integrated, even producing its own steel and by the 1930s over 100,000 employees worked there, producing nearly every component for the cars that Ford built. It was, at the time, considered to be a key advantage.

Nobody makes factories like that anymore though. It wouldn’t make any sense. In today’s economy, it would be impossible for any one firm to be competitive in more than a handful of the thousands of components that go into a modern automobile. That’s why today we have global supply chains.

All to often, we think of innovation as an problem of developing internal capabilities but in today’s world, far more value can be unlocked by widening and deepening connections. So we need to learn to use the entire ecosystem, including partners, suppliers, customers and open resources and think in terms of value networks rather than value chains. Continue reading “Innovation Isn’t About What You Control, But What You Can Access”

Don’t Bet On Someone Else’s Success Story

Every bold new business idea starts with a success story. Either it is a single organization or an aggregate sample that implemented a particular strategy and achieved outstanding results. That solid track record helps to convince others to adopt it, yet somehow the new management fad fails to deliver as promised.

The problem is often one of survivorship bias. While it’s fairly easy to find an examples of those who were successful with a particular strategy, the ones who tried it and failed are often overlooked. Other times, a post hoc fallacy is at work. Just because someone implemented a particular strategy doesn’t mean that’s what led to success.

The truth is that a strategy can never be validated backward, only forward. The past is a very imperfect indicator for the future because circumstances are constantly in flux. Technology, competition and customer preferences change all the time, so whenever anybody tells us that they have come up with a sure-fire way to succeed, we need to be skeptical. Continue reading “Don’t Bet On Someone Else’s Success Story”

What Will We Do After Moore’s Law Ends?

In 1965, Intel cofounder Gordon Moore published a remarkably prescient paper which predicted that computing power would double about every two years. For a half century, this process of doubling has proved to be so remarkably consistent that today it is commonly known as Moore’s Law and has driven the digital revolution.

In fact, we’ve become so used to the idea that our technology gets more powerful and cheaper that we scarcely stop and think about how unprecedented it is. Certainly, we did not expect horses or plows — or even steam engines, automobiles or airplanes — to double their efficiency at a continuous rate.

Nevertheless, modern organizations have come to rely on it to such an extent that people rarely think about what it means and, with Moore’s law about to end, that’s going to be a problem. In the decades to come, we’re going to have to learn to live without the certainty of Moore’s law and operate in a new era of innovation that will be profoundly different.

The Von Neumann Bottleneck

Because of the power and consistency of Moore’s Law, we’ve come to associate technological advancement with processor speeds. Yet that is only one dimension of performance and there are many things we can do to get our machines to do more at lower cost than just speeding them up.

A primary example of this is called the von Neumann bottleneck, named after the mathematical genius who is responsible for the way our computers store programs and data in one place and make calculations in another. In the 1940s, when this idea emerged, it was a major breakthrough, but today it’s becoming somewhat of a problem.

The issue is that, because of Moore’s Law, our chips run so fast that in the time it takes information to travel back and forth between chips — at the speed of light no less — we lose a lot of valuable computing time. Ironically, as chip speeds continue to improve, the problem will only get worse.

The solution is simple in concept but elusive in practice. Just as we integrated transistors onto a single silicon wafer to create modern day chips, we can integrate different chips with a method called 3D stacking. If we can make this work, we can increase performance for a few more generations.

Optimized Computing

Today we use our computers for a variety of tasks. We write documents, watch videos, prepare analysis, play games and do many other things all on the same device using the same chip architecture. We are able to do this because the chips in our computers are designed to be a general purpose technology.

That makes computers convenient and useful, but is terribly inefficient for computationally intensive tasks. There have long been technologies, such as ASIC and FPGA, that are designed for more specific tasks and, more recently, GPU’s have become popular for graphics and artificial intelligence functions.

As artificial intelligence has risen to the fore, some firms, such as Google and Microsoft have begun designing chips that are specifically engineered to run their own deep learning tools. This greatly improves performance, but you need to make a lot of chips to make the economics work, so it is not practical for most tasks.

The truth is that all of these strategies are merely stopgaps. They will help us continue to advance over the next decade or so, but with Moore’s Law ending, the real challenge is to come up with some fundamentally new ideas for computing.

Profoundly New Architectures

Over the last half century, Moore’s Law has become synonymous with computing, but we made calculating machines long before the first microchip was invented. In the early 20th century, IBM first pioneered electromechanical tabulators, then came vacuum tubes and transistors before integrated circuits were invented in the late 1950s.

Today, there are two new architectures emerging that will be commercialized within the next five years. The first is quantum computers, which have the potential to be thousands, if not millions, of times more powerful than current technology. Both IBM and Google have built working prototypes and Intel, Microsoft and others have active development programs.

The second major approach is neuromorphic computing, or chips based on the design of the human brain. These excel at pattern recognition tasks that conventional chips have trouble with. They also are thousands of times more efficient than current technology and are scalable down to a single tiny core with just a few hundred “neurons” and up to enormous arrays with millions.

Yet both of these have their drawbacks. Quantum computers need to be cooled down to close to absolute zero, which limits their use. Both require profoundly different logic than conventional computers and need new programming languages. The transition will not be seamless.

A New Era Of Innovation

For the past 20 or 30 years, innovation, especially in the digital space, has been fairly straightforward. We could rely on technology to improve at a foreseeable pace and that allowed us to predict, with a high degree of certainty, what would be possible in the years to come.

That led most innovation efforts to be focused on applications, with a heavy emphasis on the end user. Startups that were able to design an experience, test it, adapt and iterate quickly could outperform big firms that had far more resources and technological sophistication. That made agility a defining competitive attribute.

In the years to come the pendulum is likely to swing from applications back to the fundamental technologies that make them possible. Rather than being able to rely on trusty old paradigms, we’ll largely be operating in the realm of the unknown. In many ways, we’ll be starting over again and innovation will look more like it did in the 1950’s and 1960’s

Computing is just one area reaching its theoretical limits. We also need next generation batteries to power our devices, electric cars and the grid. At the same time, new technologies, such as genomics, nanotechnology and robotics are becoming ascendant and even the scientific method is being called into question.

So we’re now entering a new era of innovation and the organizations who will most effectively compete will not be the ones with a capacity to disrupt, but those that are willing to tackle grand challenges and probe new horizons.

An earlier version of this article first appeared in Inc.com

4 Innovation Mistakes That You Really Need To Avoid

One of the things that startup guru Steve Blank likes to say is that no business plan survives first contact with a customer. What he means that every idea is wrong. Sometimes it’s off by a little and sometimes it’s off by a lot, but it’s always wrong and the sooner we find its flaws the sooner we can start making it work.

This holds true even when an idea is revolutionary, like electricity or the personal computer. There is always a gap between an idea and it’s impact. In fact, on average takes about 30 years to go from an initial discovery to a significant effect on our lives. That means that the “next big thing” is usually about 29 years old!

So there is no lack of fertile ideas, but still most organizations fail to innovate. The problem is not a lack of intelligence or ambition — any enterprise that is able to stay in business for any length of time obviously has both — but that innovating successfully is profoundly different than running operations, which leads managers to make four fatal innovation mistakes.

1. Seeking Only Large Addressable Markets

Every business plan starts with assumptions. You need to estimate costs, sales and growth for years in advance. Obviously, the more favorable your assumptions are, the better your business plan looks and the more likely it is to attract investment, so you want to build a case for high sales, rapid growth and low costs.

Of course, to be earn support, a business plan also needs to look realistic. Costs need to reflect market rates. Revenues need to be based on actual spending trends. There needs to be an analysis rooted in tangible benchmarks, you can’t just pull stuff out of thin air and expect to convince anybody that your plan is viable.

One solution to the problem is to target the largest addressable market you can find. In a multi-billion dollar market, capturing just a few points of market share can seem like a very reasonable assumption and, all of a sudden, your numbers start to work. From a small foothold, you can show years of steady growth.

Unfortunately, the world is not an Excel spreadsheet. No matter how big the market, somebody has to want to buy what you’re selling. So if your product is truly new and different, you need to build for the few, not the many and that means identifying a “hair on fire” use case — a customer who needs your product so badly that they will overlook early glitches.

2. Getting Trapped In Your P&L

The reason that executives feel pressure to identify large addressable markets is that it’s good operational practice. When you want to grow your business, it makes sense to look for more customers. However, there is a fundamental difference between innovation and optimizationthat leaders too often ignore.

When you are working to improve an existing business, you have a lot of information to work with. You already have customers and should have a good understanding of how they use your product or service. So identifying a large swath of new customers that have similar needs is an entirely sensible way to grow.

However, when you seek to create something that’s truly new and different, you have no way of knowing what the demand will be. The truth is that the next big thing always starts looking like nothing at all. So if you limit yourself to only the opportunities that you can quantify, you’re never going to achieve anything more than an incremental improvement.

One thing that I noticed in researching my book Mapping Innovation is that the best innovators always invest in uncertainty. Although they remain disciplined about resources and manage risk effectively, they make sure they are devoting resources to explore new areas with no idea about what the return will be. Ironically, this was the closest thing I found to a sure bet.

3. Failing To Look Beyond Internal Capabilities

A basic tenet of good management is that you want to leverage your capabilities over as large a footprint as possible. For example, once Amazon learned how to sell books online better than anyone else, it leveraged those same capabilities into other product categories and achieved similar success in the expanded markets.

So, not surprisingly, the first thing most companies look for is a proprietary asset or capability they can apply to a new market. That’s generally very sensible, but it’s also very limiting, because it ignores an enormous range of capabilities and assets among customers, partners, vendors and open platforms.

Sun Microsystems Cofounder Bill Joy once famously said, “no matter who you are, most of the smartest people work for someone else.” That’s very true, but it doesn’t go nearly far enough. The best of almost everything resides somewhere else, so by limiting yourself to what you have internally, you’re putting yourself at a real disadvantage.

Competitive advantage is not something you start with, but something you build over time. So focus less on the assets and capabilities you control and more on those you can access. By using the whole innovation ecosystem, you can greatly extend your ability to innovate.

4. Looking For A Great Idea Instead Of A Good Problem

At any given time, there are far more ideas buzzing around an organization than it can pursue. Rapid changes in technology, market trends and consumer behavior only fuel the fire. With everything that’s going on it seems that the potential for innovation is endless and, in a sense, it is. Every year countless new startups are funded and new products are launched.

Most fail. Just because you have an idea doesn’t mean it’s viable or that you can make it work. The truth is that innovation isn’t about idea, it’s about solving problems. The truth is that nobody cares about your ideas, they care about meaningful problems you can solve for them and that’s where you need to focus you energy.

While writing Mapping Innovation, I came across dozens of stories from every conceivable industry and field and it always started with someone who came across a problem they wanted to solve. Sometimes, it happened by chance, but in most cases I found that great innovators were actively looking for problems that interested them.

That’s why the firms that are able to innovate consistently — not one-hit wonders but those who make it happen year after year and decade after decade — have a systematic and disciplined process for identifying new problems. How they do that varies widely, but the core concept remains the same.

So forget about the hype and the myths. It’s the ability to identify and solve important problems that transforms disruption into opportunity.

– Greg

An earlier version of this article first appeared in Inc.com

Don’t Worry About People Stealing Your Ideas

Chester Carlson worked on his idea for years. It was tough, messy work and when his wife tired of the putrid smells, sulfur fires and occasional explosions emanating from the kitchen, his experiments were exiled to a second floor apartment in a house his mother-in-law owned. It took years, but he came finally up with a working prototype. He tried to sell his machine to the great corporations of the day, including GE, RCA and IBM, but to no avail. Eventually, he teamed up with the Haloid Corporation, which eventually changed its name to Xerox and in 1959, more than 20 years after Carlson began his quest, it launched the 914 copier and became one of America’s leading corporations. “Don’t worry about people stealing your ideas,” said the computing pioneer Howard Aiken. “If your ideas are any good, you’ll have to ram them down people’s throats.” The truth is that innovation needs combination and few ideas can make much of an impact alone. So if you want your ideas to amount to anything, you’re usually better off sharing them. Continue reading “Don’t Worry About People Stealing Your Ideas”

Build For The Few And Not The Many

When Google first announced its Glass prototype, complete with a snazzy video, it generated a lot of excitement. Through augmented reality projected onto the lenses, users could seamlessly navigate an urban landscape, send and receive messages and take photos and videos. It was a completely new way to interact with technology.

Yet criticism quickly erupted. Many were horrified that hordes of wandering techno-hipsters could be surreptitiously recording us. Others had safety concerns about everything from people being distracted while driving to the devices being hacked. Soon there was a brewing revolt against “Google Glassholes.”

Now, however, Wired reports that Google Glass is taking on a new life and gaining traction as an industrial tool. From factory floors to operating rooms, augmented reality is proving effective at improving productivity, safety and documenting procedures. There’s a lesson in all of this. When your idea is truly new and different, target the few, not the many.

Continue reading “Build For The Few And Not The Many”

Summer Reading List: 12 Books To Read On Your Way To A Revolution

Most of the year is pretty hectic. There are meetings, projects and meeting about projects and then maybe a conference call to discuss the next project. With all the running around, it’s hard to find any time to actually think. Summer is a welcome respite from all of the frenzy and hubbub.

While you’re finding some time to relax at the beach or somewhere else, you may get to thinking about things you don’t like in your organization, your industry or in society as a whole and how much you want things to change. After stewing for awhile, you might even get the urge to do something about it.

Of course, as I explain in my TED Talk change isn’t easy. You have to win people to your cause, motivate them to actively participate and overcome entrenched interests. That takes more than just passion, but also strategy, organization and discipline. So for this summer’s list, I’ve got a list of 12 books that will show you how to do all that and truly change the world.

Blueprint for Revolution by Srđa Popović

In 1998, a group of student activists in Serbia set out to bring down Slobodan Milošević’s brutal regime. Two years later, the Belgrade strongman was out, but their movement, called Otpor! (Resist! In Serbian) lived on. They created the Centre for Applied Nonviolent Action and Strategies (CANVAS) to train activists in other countries, such as Georgia, Ukraine and Egypt.

This book, written by the Executive Director of CANVAS and Co-Founder of Otpor, is part autobiography and part instruction manual. Popović tells personal stories of his work in Serbia’s “Bulldozer Revolution” and training activists around the globe. It’s powerful, insightful and surprisingly funny.

If you are an aspiring changemaker and read only one book this summer, make it this one!

Team of Teams by General Stanley McChrystal, Tantum Collins, David Silverman and Chris Fussell

In 2004, General Stanley McChrystal commanded the greatest fighting force in history, with the most highly trained commandos, the most sophisticated technology and the most destructive weapons. Still, while they were winning every battle in Iraq, they were losing the war. They were fighting an enemy that they couldn’t comprehend, much less predict.

McChrystal began to understand that the problem wasn’t of resources or even of strategy, but that of agility and interoperability. He also saw that in order to defeat a network, his forces had to become a network. So the General set out to widen and deepen connections between the individual units under his command and transform them into a “team of teams.”

This is an excellent, informative and highly readable book. One of the co-authors, McChrystal’s former aide-de-camp Chris Fussell, has recently put out a follow-up, One Mission: How Leaders Build a Team of Teams.

Regional Advantage by AnnaLee Saxenian

In the 1970s, Route 128 outside of Boston was the center of the technological universe. With firms like DEC and Data General, it looked poised to dominate the nascent computer industry. Its success led to the “Massachusetts Miracle” that helped propel Michael Dukakis to a Presidential candidacy. But by the late 80’s, the mantle had passed to Silicon Valley.

In this meticulously researched book, AnnaLee Saxenian explains why. While Route 128 was focused on the success of individual firms, Silicon Valley fostered an ecosystem that proved, and continues to prove to this day, to be a constant driver of change in the world of technology and beyond. Written over 20 years ago, this book stands the test of time.

Six Degrees by Duncan Watts

Any movement for change is dependent on networks. Whether it is building networks of protesters to bring down a dictator, networking silos in your organization or building industrial ecosystems to create a regional advantage. If you want to understand how to create change, the first step is to understand networks.

Written by a pioneer in network science, Six Degrees explains the basic concepts in this fascinating and highly readable book. Watts not only brings pathbreaking insight, but is also a talented storyteller and brings the ideas to life with vivid examples and case studies. He somehow manages to make cutting edge science fun and enjoyable

Walking With The Wind by John Lewis

Often called “the conscience of the U.S. Congress” John Lewis is a paragon of moral courage and common sense. In this engrossing book, he traces his past from a childhood as a dirt-poor sharecropper’s son, to leadership in the “Nashville Movement” and the Student Nonviolent Coordinating Committee (SNCC) as one of the “Big Six” of civil rights.

The book is incredibly candid about not only the incredible victories in securing civil rights, but also his doubts and frustrations. Perhaps most importantly, it shows how important it is for revolutionaries to also take responsibility for governance after the major battles have been won. It’s rare that you find a book that’s so interesting, instructive and inspiring.

Rules for Radicals by Saul Alinsky

Saul Alinsky practically invented community organizing. Published in 1971, at the height of the counterculture, when other revolutionaries staged sit-ins or advocated violence, Alinsky pushed for creating institutions and winning small, incremental victories. He argued that it was not only conflict, but also a sense of community, that makes change happen.

Considered a classic today, Rules for Radicals provides a blueprint for anyone who wants to make a difference in their community, their industry and throughout society. Although considered to be a left wing icon, its influence has been so great that it was used as an operating manual for the conservative Tea Party movement that emerged after the financial crisis in 2009.

The Tea Party and the Remaking of Republican Conservatism by Theda Skocpol and Vanessa Williamson

The Tea Party has undoubtedly been one of the most powerful political movements of our time. Emerging seemingly out of nowhere, it quickly became a force to be reckoned with in American society, driving policy decisions through effective campaigning at a grassroots level. Few political movements have won such pervasive influence so quickly.

Theda Skocpol and Vanessa Williamson, both academics at Harvard, spent a year researching the Tea Party, analyzing demographics and conducting extensive interviews with activists. The result is a penetrating study that breaks stereotypes and brings understanding to this quintessential 21st century phenomenon.

This Is an Uprising by Mark Engler and Paul Engler

On the other end of the political spectrum, liberal activists Mark Engler and Paul Engler provide extensive background from historical figures such as Gandhi and Martin Luther King as well as insights from recent movements such as Occupy and Black Lives Matter. Thoroughly researched, it provides a great overview of how movements succeed — and fail.

This one isn’t for everybody and the authors take no great pains to conceal their political bias. Still, if you’re looking for a far reaching review of both contemporary and historical movements, as well as the academic literature that helps drive them, you can’t do much better than this book.

Small Acts of Resistance by Steve Crawshaw and John Jackson

During the Poland’s Solidarity movement in 1982, a boycott was organized against the government’s propaganda-laden evening news. The problem with the boycott was obvious. How do you show others that you’re not watching TV?

The residents of Świdnik, a small city near Lublin, found a way. Instead of watching the news at 7:30, they all went for an evening walk, many carrying their TV sets in carriages and wheelbarrows. Before long, the practice spread to other Polish cities and the boycott turned into a rousing success.

You’ll be amazed at all the ingenious ways to that activists think up to defy the powers oppose them in this delightful book. It’s amazingly instructive, as well as a lot of fun!

The Autobiographies of Mahatma Gandhi, Martin Luther King Jr. and Nelson Mandela

For all the scholarship and theorizing that has been focused on social movements and what it takes to create transformational change, there is no substitute for a first hand account. These autobiographies by three famous icons are candid, insightful and wonderful reads.

So that’s my list for this summer. I hope you found a few that peaked your interest. Also, as a special bonus, here’s my TED talk about my personal experience with revolution and how I learned about changing the world.

https://www.youtube.com/watch?v=IOt1dLVyHjQ

An earlier version of this article first appeared in Inc.com

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