Archive for the 'Management' Category

Value Creation in a WWW*

Published
by
Dave
on October 26, 2008
in Innovation, Management and Opensource
. 17 Comments

I love using diagrams to help explain concepts which would otherwise be difficult to remember. They make it easier for some people to call up in their minds and immediately recall complex concepts.

I thought of the following model a few weeks ago to describe how value is realized in today’s fast-paced, largely unpredictable markets. I’ve entitled it “Value Creation in a Wild Wired World“. Please let me know what you think…

Industrial Age Value Creation:

Industrial Age Innovation

This V model of Value creation is suited to stable, predictable markets and industries.The consumer doesn’t have many alternative choices of products and services to fulfill their needs here. The company needs to recoup their significant investment of cash, time and labour by charging as much as possible, and keeping the product as is for as long as possible – taking it from being a Star product to a Cash Cow eventually. Microsofts OS is a good example of this, but they’re slowly shifting to the model below…

Rapid Prototyping, Perpetual Beta

An alternative model, more suited to fast changing, unpredictable, hyper-competitive markets looks more this:

Value Creation in a Wild Wired World

The idea here is to launch with a “good enough” prototype, attract early adopter users, and develop the product according to their needs and feedback. In the software development world, this is known as “Beta” – where the product is in testing mode, and constantly improving according to how people are using it. There is generally less upfront investment required in this model, which is important since many products launched into unpredictable, competitive markets will fail unless they adapt in ways that weren’t originally envisaged by the product team. Often times the best ideas here arise to serve an unmet need of the founder – you might hear the founder saying the product was launched to “scratch my own itch” The other motto of firms that operate with this model is: “release early, release often”. Google does this well.

Your feedback

What do you think about these models? Do they make sense? Is there anything you’d label differently, add to, or remove from the diagrams?

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Standard Management Sabotage

Published
by
Dave
on June 12, 2008
in Culture Jamming and Management
. 1 Comment

Simple SabotageThese instructions come from a 1944 CIA manual on how to sabotage a business:

(1) Insist on doing everything through “channels.” Never permit short-cuts to be taken in order to expedite decisions.
(2) Make “speeches.” Talk as frequently as possible and at great length. Illustrate your “points” by long anecdotes and accounts of per­sonal experiences. Never hesitate to make a few appropriate “patriotic” comments.
(3) When possible, refer all matters to committees, for “further study and considera­tion.” Attempt to make the committees as large as possible — never less than five.
(4) Bring up irrelevant issues as frequently as possible.
(5) Haggle over precise wordings of com­munications, minutes, resolutions.
(6) Refer back to matters decided upon at the last meeting and attempt to re-open the question of the advisability of that decision.
(7) Advocate “caution.” Be “reasonable” and urge your fellow-conferees to be “reason­able” and avoid haste which might result in embarrassments or difficulties later on.
(8) Be worried about the propriety of any decision — raise the question of whether such action as is contemplated lies within the juris­ diction of the group or whether it might conflict with the policy of some higher echelon.

I think this is standard management practice in the corporate world today! I’m sure I don’t need to point out how incredibly ironic, and wrong, this is.

Thanks to David Weinberger.

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The Management of Innovation

Published
by
Dave
on April 21, 2008
in EBM, Innovation and Management
. 11 Comments

Innovation is a large and important topic, and there are many different perspectives and definitions of it. It is important to understand the factors which lead to Innovation, since it is considered to be a major driver of economic growth. In the Evidence Based Management course that I’m teaching at UCT, we take the perspective that Innovation only occurs when tangible economic value is realized from the application of new ideas, inventions, or processes.My perspective on this has been informed by my interactions with Prof. Eddie Obeng, Christof Gillet and Jon Foster-Pedley from Pentacle, a virtual business-school that teaches Innovation to business executives around the world. Their perspective of Innovation as a management process that yields economic value (i.e. Money!) has informed the way I approach it in all my endeavors.

The most innovative companies in the world, such as Google, Nokia, P&G, and Johnson & Johnson, don’t leave Innovation to chance. They all have systems and management processes to take lots new ideas, reduce them to what can be implemented, and then set-about developing, testing, and launching the new products, processes, and services.

An innovator needn’t be a Creative, nor an Inventor. In fact, many innovators simply have systems and processes to apply the creativity and invention of other people to solving problems. This, of course, can be highly profitable.

Edison, for example, is often cited as the inventor of the lightbulb. This however, is inaccurate, as Edison did not invent the light-bulb. He did, however, tackle the problem of disintegrating filaments in electric powered light-bulbs, a problem encountered by people for decades prior to his breakthrough. To achieve his desired result of a long-lasting and inexpensive light filament, he applied a painstaking process of trial and error, working with numerous collaborators and scientists, many of whom contributed their creative ideas for little or no credit. The result of their work was an inexpensive carbon filament, bent into a horse-shoe shape, which lasted longer due to a more efficient vacuum which he obtained. This made the old light-bulb invention usable in cities, and thus elevated it from the realm of invention to Innovation.

We therefore draw the distinction between Creativity, Invention, and Innovation so that we can prioritize the value-creation aspect of Innovation. This allows more people, creative or not, to engage with the subject.

Creativity and Innovation

While creativity often plays a part in the process of innovation, it is not the end in itself. Creative ideas are not always relevant to the market, nor are they necessarily practical. So, in the process of Innovation, creative constraints are drawn to help focus creative ideas on solving a problem.

Invention and Innovation

Invention is probably one-step closer than Creativity to Innovation. A creative idea may spark the design and development of an invention. An invention, in turn, can be applied in the market to create value or change- thus becoming an Innovation.

“An important distinction is normally made between invention and innovation. Invention is the first occurrence of an idea for a new product or process, while innovation is the first attempt to carry it out into practice” (Fagerberg, 2004: 4)

Innovation and Action 

A quote which comes to mind:

“Ideas are a dime a dozen, people who put them into action are priceless“.

(I’m not sure who said this, some sources say Einstein, but it might as well be Mastercard).

This perspective on Innovation take it out of the conceptual realm, and into the action and implementation space. The most innovative companies, then will have the most effective systems (or Heuristics) for determining which ideas are relevant (perhaps among many ideas submitted by the crowd), and then rapidly prototyping ideas, and testing and developing them in the market profitably.

If I achieve anything in this part of the course it should be that the students realize that Innovation doesn’t always come in a lightning flash of insight,  but it can be managed as a business process to yield consistent results and value over time.

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Judgement Heuristics and Productivity

Published
by
Dave
on April 6, 2008
in EBM, Heuristics, Management and Strategy
. 2 Comments

Heuristics are “rules of thumb” used to make complex decisions easier. They are particularly used to create a method that often rapidly leads to a solution that is usually reasonably close to the best possible answer, although they are a form of fuzzy logic and not always accurate in all contexts.

Heuristics are useful in the world of Business where choices involving many variables (including social dynamics which are hard to define) need to be made.

For example, here are some Heuristics I use to make my business life slightly simpler:

  • If you can’t think of a solution to a problem, imagine it is already solved and then work backwards to find out how you might have got there.
  • Don’t take on new business opportunity which doesn’t align with the stated vision and purpose of the organization.
  • Given the choice, meetings are always at my office.

I could go on, but hopefully you get the point. It just means that I spend less time wondering about these little decisions which need to be made quite often.

Heuristics can be applied to many instances which require subjective judgement. For example, when deciding which person to hire among many candidates (where each “box” you need to “check” is a heuristic of sorts). You can and should weight the heuristics in cases like this so that more important criteria can be prioritized over “nice to haves” in any particular individual.

Many business processes which are used by consultants are heuristics, which serve as guidelines. So, yes, heuristics can be monetized. People love guidelines, and “formulas for success”, if you’ve worked out a technique to generally ensure a good outcome to a particular challenge (be it weight-loss, or website design), then consider documenting it.

Another useful application of Heuristics is in gaining rapid competence in unfamiliar fields. If someone has done it before you, then you can model their process and break down more complex challenges into definable steps to follow. This is often what we seek to achieve when we use case-studies, and define “best practices” in business.

My own finding with judgment heuristics is that they should be documented, practiced, and be in an almost perpetual form of testing, where you tweak and refine the process as you go. As the chaps at World Wide Creative would say – never trust a skinny chef (which is itself a heuristic)! The outcome is that you can become a more reliable performer, and you can save time, and use more mental energy on more interesting challenges.

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