This is design thinking

Met up with my old friend, Wickie, today and discussed approaches to business and organizational transformation and progress. One of the hot approaches these days is 'design thinking'. I've always had an issue with the term because:

1. Like so many other specifically coined terms, it becomes a buzz word that covers everything and nothing, and in the end no one understands what it is. Like 'experience economy', 'social media' and 'user-driven innovation' which have become very misunderstood (see my posts about the latter two 'It's the mindset, not the media' and 'What is user-driven innovation - and what is not').
2. The spokespeople for design thinking tend to - as with all buzz things - describe it in long, very unconcrete terms that leave me none the wiser about what exactly design thinking is and why I should care.
3. Design thinking fundamentally consists of elements that are very well-known from disciplines like brand management and web/IT development, so what's new?

I prefer to call a spade a spade. Tell me in brief layman's terms what it is. So Wickie, who is trained as a designer and works with design as a mindset, and I tried to sum up in the simplest possible way the core elements of design thinking:

1. A holistic, cross-disciplinary approach to problem-solving that uses
2. ... a prototyping, iterative process in order make stuff (change, processes, things, plans)
3. ... tangible very quickly.

See, now I get what design thinking is. I hope you do, too.

Ikea economy

We know about Apple economy, ie other companies creating businesses off Apple products (eg iPod accessories). 
Here's Ikea economy: http://springwise.com/weekly/2010-08-04.htm#ecomodernism. A company that covers the part of the value chain that Ikea doesn't.

What companies need to focus on

Fifty years ago, Peter Drucker said that "any business enterprise has two - and only these two - basic functions: Innovation and marketing".

It's unfortunate that so many companies still struggle with both; the good news is that there is so much potential for improvement and progress.

Today's links

• Wired's take on Google's (past-present-future) approach to music.

Today's links

• Innovation: Why Failing Is OK. Or why 'Fail Fast Forward' should probably be the 6th criteria for successful innovation in organizations as laid out in my post here.

5 criteria for successful innovation in organizations

My old acquaintance Wickie and I met up for coffee the other day, and as we both have an interest in the intersection of organizations and innovation, we discussed our various experiences in this potent field.

At one point she asked me to name the 5 key criteria for successful implementation of innovation projects within an organization.

Many wise books and articles have been written about this and I can only humbly suggest my own perspective which has been shaped by working with 'new stuff' in large corporations the past 15 years.

So here we go, my view on 5 criteria for successful innovation within an organization:

1) Senior management support and advocacy

This is old hat, really, but true nonetheless. If the innovation project hasn't got the support and enjoys active advocacy from upstairs, then forget it.

Be it a new business process, a ground-breaking product, a different set of performance metrics, an untried department structure, a novel view on strategy planning, an unfamiliar business model, a new business unit - it has to be backed by the CEO and his/her management team and explicitly supported and encouraged by them.

If you want to try and go it alone, be my guest - I've done this myself on more than one occasion - but there will be a limit as to far you'll get.

2) The right people

Often, you'll have only few headcounts dedicated to the innovation project so you have to be certain that they're the right people. You can't afford to make hiring mistakes or to lose people in this situation - hiring the wrong person means losing capacity, losing people means losing vital knowledge.

With the right people, you can move at high speed and to high standards, because they create the kind of synergy that make the whole bigger than the sum of the parts.

Not only do people working on innovation projects have to have superior technical/formal skills in more than just their own immediate area. They also have to possess certain personal skills:

• High capacity for learning new stuff and for applying new knowledge, constantly.
• Comfortable with the unknown and with making decisions based on limited information.
• Ability to fly with the eagles and crawl with the ants, meaning keeping the big perspective while getting deep into the engine room.
• Creative thinkers, able to problem-solve and to generate options.
• Driven and with a relatively high level of energy.
• Communication skills, open to and comfortable with a lot of feedback and dialogue.

3) An easily understood plan

Forget complicated, long-winded reports and poetic, flowery vision statements. 'A woolly plan means a woolly idea'.

To get buy-in, the plan needs to be concrete, communicated in basic terms and describe your constituents' role in it. Is it also possible to describe what's in it for them, great, but sometimes there isn't anything in it for them directly, other than a nod from senior management. And actually, that counts for a lot for a lot of people.

4) Stick to the plan

Your plan lays out the goals and how to achieve them. This is worth nothing if you don't stick to it. It's tempting to throw in a new idea that you just heard about from a colleague, your well-meaning boss might have some new thought that would really add a great dimension to the project, the sales guys might want you to please a big customer, and so on and so forth.

Listen to them, take it in, and then tell them why you will stick to the plan. Of course, there might be internal or external developments that force you to take a slight detour or swap the timing of key building blocks, but stick to the overall course and at all times relate everything you do back to the key objectives.

5) Understand where in the innovation process you are

All innovation projects consist of a number of phases that each have certain characteristics, set of activities, focus, and operating mode. Some call it Storming, Forming, Performing, Re-forming. Others call it Proof-of-concept, Proof-of-business, Growth, Scale. Others call it something third, but it all means the same thing, really.

The point is to understand each of these phases, in which phase your innovation project is, and when it needs to shift from one phase to the next. It's not unusual that the project owner or team firmly believes that the project has concluded, say, the proof-of-concept phase and is well into the proof-of-business or even the growth phase. This can be detrimental because focus is on a set of activities that are wrong for the project at that particular time.

For example: A new business unit might assess that it's the right time to start heavily marketing the new service and is overlooking that key business processes are not firmly in place - which would mean that the increased demand would bring the back office to its knees, disappoint customers, and make you unpopular with your supply chain and customer service colleagues.

These criteria, I propose, are the 'high five'. If you have other views on key criteria for successful innovation projects, please don't hesitate to comment on this post or drop me a note.

What is user-driven innovation - and what is not

Have you noticed the surge in user-driven innovation? Or rather - the surge in companies and consultancies who say that they do user-driven innovation?

Well, I have and it's causing me a great deal of concern. Why, isn't user-driven innovation a good thing, you might ask. Yes, it is. Only most of these companies and consultancies aren't actually doing user-driven innovation. And this is creating problems for the real user-driven innovation, ultimately watering down the concept and its value.

User-driven innovation (UDI) means that a firm involves its users directly in the product creation process ('innovation' could also be innovation in eg processes or eg communication through user-driven content or facilitation of peer2peer communication, but in this post I will refer to UDI as products/services development). There are three main ways of doing that:

1. Co-creation - inviting a number of specific users, often lead users, to create new products with the company's own designers. Example: LEGO Mindstorms.
2. Customization - facilitating that the user can design his own product based on a number of features and material combinations that the company makes available. Example: Nike ID, LEGO Design By Me, Timbuk2.
3. Crowdsourcing - outsourcing product design entirely to the users. Example: Threadless.

There are lots of hybrids of the three categories above but for the sake of simplicity, let's stick with these. The point is that with UDI there are levels of user-involvement - and reversely, levels of brand control - but all involve direct user participation in the product creation.

And certainly, embarking on any of these three requires full understanding of the strategic, operational, and intra-cultural implications and a plan and desire to deal with them.

• For companies born as UDI based companies, like Threadless, this is less of an issue since their entire business is engineered towards facilitation of UDI - it simply is their business model.
• For established companies, like LEGO where I headed up the customization and co-creation business unit for a while, UDI represents issues pertaining to virtually all parts of the company. From sourcing policies, supply chain processes, IT systems, forecasting methodology, product quality standards, legal and IPR matters, corporate culture and HR, success criteria and KPI definition, to brand control policies, marketing principles and so on and so forth.

Simply put, UDI represents a different way of doing business.

But what seems to be happening is that UDI is being reduced to either the upstream research or the technology platforms that enable mass-participation. Let me explain:

Lately, I've run into more and more consultancies and agencies who position themselves as UDI companies. But what they do is research on behalf of a client that involves asking users what they want and coming up with product concepts based on this input.

But that is not UDI. That's market research. 'Oh, but we go out and ask the users in their own environment and study how they use the products and bring back their input', they say. That is not UDI either. That's anthropological market research. Something that most companies ought to do on a regular basis, yes, but UDI it ain't.

Anthropological research does not equal UDI any more than a cat and a dog equal a zoo.

Same thing with the tech platforms. Just because a software firm develops a CMS or a set of apps that enable user participation does not mean that this firm 'makes UDI'. In fact, no agency or consultancy actually 'does' UDI. Only companies whose users are directly involved in the product or service creation can claim that they 'do' UDI.

We have to understand that UDI is a business model and requires a business system and a company culture that underpins it.

We have to understand that it means measuring success differently, designing new processes for the product development, figuring out new reward systems, applying new principles to marketing and branding of the products, changing ERP systems and data flow, aligning the internal interests - and, if we're talking about established companies, perhaps also considering whether UDI should be an integrated part of the company or be developed as a separate entity that operates entirely with its own value chain set-up.

UDI requires sticking one's hands deep into the engine room to understand the operational model that is and the model that needs to be, as well as loosening the grip on the brand and allow its users to bring their interpretation forward. It can seem a bit scary but the better you know your business and the more confident you feel as a brand, the easier it is.

The rewards come in the form of happier users, more loyal users, higher-value users, users that will spread the word. And in the form of ongoing market and user insights, and - if you do it right - more streamlined internal processes, a more agile business operation, and a more change-ready organization.

These rewards, however, only come if we understand that UDI involves the entire value chain and corporate culture, not simply upstream research, as user-centred as it may be, product concepts derived from it and a software platform to facilitate it.

Today's links

• Google Brings Online Music To the Masses
• This Is It Makes $20M In One Day and Gives Fans Closure
• Local Motors: A New Kind Of Car Company Leverages Crowd-Sourcing
• Stylish Camping At the Opera

Today's links

I'll start posting links to stories that (I find) are particularly interesting. Some days there'll be a lot of links, some days there'll be none.

• Google and Bing race to search social media
• Local businesses in Denver ranked by their social benefit
• Volkswagen to rely solely on iPhone app for GTI launch (credit to my friend Ronnie Rocket for this one)

Mind The Gap

Recently, the Danish music industry was granted 9.4 million kroner (1.26 million euros) by the Ministry of Commerce to develop music talent, export, insight, technology solutions, and new business models. As a business professional with a strong music association, I applaud this.

Indeed, one of the major challenges is bridging the gap between the music community and the business community. There is a lot of potential for brands and artists to use each other to develop their respective identities and relationship with their users (fans). So far, though, neither camp seem to understand the other particularly well.

Brands - and often their agencies - treat music as a tactical add-on at best. The artists - and often their record companies and managers - treat brands as a sponsor, rarely as a collaborator, and sometimes just as a wallet.

Brands need to learn how to leverage music strategically, as a powerful dimension and a path to a strong(er) emotional bond between them and their users. Artists need to learn what's on a busy marketing director's agenda, what s/he considers success criteria, and why music often simply isn't a priority. Both need to learn how to create great fits, and also recognize when there is no fit at all.

A coordinating body, Musikzonen (the Music Zone), has been established to manage the 9.4 million kroner from the Ministry of Commerce and facilitate the most effective use of this money. And today, they hosted a kick-off conference to introduce the Musikzonen initiative and provide some inspiration to cross-disciplinary and commercial partnerships. A great conference, and a great idea. Only, the audience was all music industry folks. Apart from one of the co-speakers and me, there was no one from the business community, no consumer experience manager, no brand director, no ad agency executive. The Musikzonen board informed that they'd received a lot of interest from the business community about the overall initiative. Excellent, but then why weren't they there?

And why wasn't one of the speakers a grumpy marketing manager with no interest whatsoever in music but with a desire to look good in front of senior management, hence thinking only of hard KPIs that prove ROI down to the penny? These are the folks that ultimately need to be influenced, if the aforementioned gap is to be bridged.

There's a lot to be said - and done - about the relationship between brands and bands (and fans). The relationship between culture and commerce, between mainstream and new stream. I look forward to the conversation.

From cardboard and crayons to content and convenience

"I know of a pharmaceutical company that only calls in a marketer when it wants to decide on the color for a new pill." (Philip Kotler in Business Week recently).

We have all been there, us marketing folks. Experienced the perception of 'Marketing, isn't that the department for cardboard and crayons?'. Marketing as campaign and event department, a tactical service function for sales or product management. This is an archaic view of marketing and an un-productive, even dangerous one, because with this view many gaps are not discovered, opportunities not explored, and value not captured.

Of course Kotler is right, marketing must act as strategic growth driver. And of course marketing must be able to set up meaningful metrics and demonstrate ROI against these metrics - it goes without saying.

What I think is not discussed enough here but is of increasing importance is the new meaning and hence emerging role of marketing. Kotler does advocate that marketing should probably prioritise developing useful and distinctive products over developing ad campaigns for (often) useless and non-distinct products. Kotler also argues that the role of marketing is to bring the voice of the consumer into the company's thinking and move from marketing to 'consumering'. This is all good!

But the thing is that marketing is something that companies do for themselves, not for consumers and it is therefore for the most part completely irrelevant for consumers. Consumers do not care about a company's marketing and why should they. Whether marketing depts need more or fewer right, left brained or two-brained people is perhaps not the question, when the key is whether they understand people deep down and empathetically, and therefore are able to grasp what really matters to their target audience. Influence is a matter of walking in their shoes. 15-20 years ago, psychology and anthropology played a role in marketing - where has it gone?

So in order for marketing to move from being a tactical service function to a strategic growth lever, it needs to come to terms with the fact that marketing needs to be relevant and add value to the target audience(s), not simply by making the ads funnier or the stores nicer-looking. But by giving far more than is expected, providing genuinely valuable content ie insight, knowledge, services that are free and convenient and extends the value - and use - of the product and brand far beyond what you paid.

It's time businesses realise that you really do just get what you give. Only, today you have to give so much more!

Still one of the best marketing books around is John Grant's 'After Image'. And Marshall Goldsmith's interview with Kotler in Business Week is here.

"You can't read the label when you're inside the jar"

What a brilliant way to express the conundrum of innovation from the inside. Courtesy of G. Michael Maddock and Raphael Louis Viton - more here.

New broadcast communication: The telemegaphone

In a time when marketeers are nervously contemplating how to get their (no doubt very important and life-changing) messages out and furiously chasing their agencies to come up with the next big thing in creative ideas and media planning, the casual and laid-back Norwegians have taken broadcast communication to a whole new level: Telemegaphoning.

What's a telemegaphone? It's a loudspeaker sculpture on top of the Norwegian Bergskletten mountain; you call a number, the telemegaphone automatically answers incoming calls and projects the sound into the immediate surroundings - in this case across the fjord and valley. More info here.

Now, I really hope that there are criteria for what kind of messages are OK to howl out into the beautiful Norwegian nature. Birthday greetings seem OK; a McDonald's promotion does not.

Google invests in electric cars

Fell over this interesting article the other day in Business Week. Google is investing in electric cars. Google and electric cars, you say? Google is spreading its investments beyond software however, there's a definite plan, in fact a vision that within the foreseeable future, transportation will be networked through not only software but also a power grid. Interesting stuff. California based Project Better Place which aims to create an electric car operator network is hopefully paying attention as there seems to be matching interests here.