Strategic Latency – Foresight to Avert Disruption

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July 24, 2014

Over the years as I have thought about strategic foresight, I have often coupled the idea with the notion of latency. To me latency implied the time it took for an enterprise to respond to a contextual shift or event. Built into that idea was the notion that the concept of latency differs from enterprise to enterprise and that enterprises can be designed reduce their latency to foreseen events and contexts.

Military Image of Ukraine

I came across an article this morning in the Diplomatic Courier, that talks about China’s efforts to reduce its strategic latency, particularly with respect to defence technologies, and its drive to innovate.

Indeed when it comes to responding to threats, it is absolutely critical to reduce the latency if in fact you cannot anticipate.

However, I wonder if today there is a specific technology that you can innovate for in preparation. It is no longer a technology by itself that is a source of a security risk. Each technology brings with it a certain complement of capabilities and these can combine in myriad ways. Individually each technology can be applied for positive or negative outcomes. One can easily understand and prepare for negative outcomes, intentional or inadvertant.

The task of anticipation however becomes onerous when these technologies are used in combination with others and uniquely in particular contexts. Sometimes the technologies used for such purposes are in themselves not particularly sophisticated, but combinations can be devastating as we have seen in recent experiences.

The road to reducing strategic latency therefore is as much a task of systematically practiciing Technology Foresight as is it is one of practicing Strategic Foresight, imagining potential scenarios and plausible misuses leading to potential security threats. If one must innovate, it must be in the domain of responding to potential negative or inadvertant uses of extant or future technology developments.

Even when the context is not one of assessing for and preparing against security threats, every enterprise must strive to reduce its strategic latency. The term has a very reactive connotation – often it is very hard to respond to a disruptive innovation after the fact. While it seems commonsense, it bears repeating, that the ideal response is only possible when one has anticipated adequately.

Disruptive innovations are around us for a long time in a form we might term ‘weak signals’, and they have not yet become significant enough to show up on our radars. It is our task to sharpen our senses so we can notice them through the noise and give ourselves the time to react – a systemic challenge that requires time.

Better still is to imagine disruptive possibilities, and shift the challenge of reducing strategic latency to the other.

The Social Dynamics of Innovation Networks

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May 29, 2014

I work out of the Cambridge Innovation Center, one of the supposedly largest such places in the world with over 400 startups and early-stage technology companies that collectively claim a couple of billion dollars in funding.

The core idea of such a place is that not only does it make the startup process easier, but the fact that you have so many of these entrepreneurs in a phycial setting that encourages serendipitous encounters and complementary partnerships, actually accelerates the innovation process and likelihood of success.

The idea of creating such places is no longer novel. There are many such places that have sprung-up in Boston itself and more such places are coming up in the US. Frequently visitors from other countries come to learn how to replicate the success of CIC in their own neighborhoods.

(Image: http://noduslabs.com/tag/sociology/ )

The idea that you need physical proximity at all in a world where technology has made it possible for people to work remotely and collaborate with anyone in the world is what is interesting.

A recent report from the University of Twente titled ‘The Social Dynamics of Innovation Networks‘, caught my attention.

…why are governments across the world investing billions of euros in developing ‘innovation campuses’ that are justified precisely on the grounds that they help build up dense inter-personal networks that can help drive innovation processes?

I have been at CIC and other co-working locations before. There was a time when I worked out of offices and not remotely from home. In all those situations, there are a social dynamic that never happened once I increasingly started working from home. Not, that I did not build relationships remotely, but they did not have that opportunity to accidentally bump into each other, sometimes in the presence of a third person, or in the context of a discussion or an artifact.

There is nothing surprising here of course – those chance encounters, did not always spark something, but they laid the ground for a possibility, that sometimes built up over time. On one among many such occassions, all the accumulated tinder of ideas would catch fire and something novel would spring in our minds.

There is much attempt to de-skill, and deconstruct the magic of innovation. There is even talk of an ERP package for Innovation Management. There are certainly aspect of orchestrating large-scale innovation that can indeed be systematized, but underneath them all is this intangible layer that is formed by social relationships, and the unpredictable, unforeseen tipping points that happen through unexpected encounters in social networks.

Fail Faster, Fail Often with Poor Design

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2014

There has been disappointing news in the entrepreneurial / new venture world in recent weeks.

Recent studies by the Economist showed a decline in new ventures and entrepreneurial activity in the US and this article by James Surowiecki in The New Yorker, tries to analyze the phenomena of large scale failure among startups.

Start up – Runner on the blocks

While it is generally assumed that entrepreneurship is for those who have a healthy appetitie for risk, he argues that that is not necessarily true. What distinguishes this class of adventurers according to him is their self-confidence.

There is a culture that has been created around entrepreneurship too – advice that recommends “Fail often and fail fast”, the relatively easy task of getting money and started and other circumstantial and contextual aspects that encourage such risk-taking.

Somewhere in such a system are mechanisms that are supposed to identify and filter the good from the poor ideas. It is assumed that the financiers have the acumen and wisdom to identify the ventures most likely to succeed. Then why I wonder is the failure rate so high.

I have had some exposure to a number of such entrepreneurs due to the location where I work in Cambridge. I am surrounded by the highest density in any one location of startups anywhere in the world. These are really smart people with great ideas, energetic, often young, enthusiastic, and also sincere.

However, I have often found, whether due to the culture of the entrepreneurial sector or due to their self-cofnidence, that their ventures are usually based primarily on product ideas or rooted in some novel technology. However, in most cases, they do not seem to have robust business concepts.

There is however also no appetite or patience for the effort it would take to design a venture. Having developed a business plan, in their mind, is a good enough substitute for a business design. I do not think they are to be held a fault here. The system encourages such thinking.

One argument is that, a good design evolves. Evolution does indeed happen in business, but then it also leaves too much to chance. Perhaps, the failure of an individual entrepreneur or venture is but a matter of statistics for the venture capitalist.

But, there is indeed a better way. It would do all in the system good to take the time to design the venture well – even if in visionary terms, before going too far forward. It would take some more deliberate work up front, but we would not see the kind of failures we see.

It is romantic indeed to think in terms of the tooth and claw nature of the world of competition and failure and extinction of species in biological/ecological terms. But, we are humans, our social systems are an improvement on that logic. We can change things through design.

If, I want to be an entrepreneur, I do not want to discover what the Germans found – that failure does not necessarily guarantee future success. I do not want to be a statistic in someone’s portfolio. I can design my way to better outcomes.

Maintaining Continuity while Reinventing

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2014

One of the mainfestations of the rapid acceleration and change we are facing these days is that business ideas and concepts become invalid more frequently than ever before.

Strategic innovation is precisely focused on this issue and could also be termed “Business Concept Innovation”.

As one deconstructs the existing business concept and reinvents it to correspond to current and future reality, using new design principles, the question often arises as to – what of the previous business design must one carry forward into the future.

In the quest for agility in the face of contextual change, when all dimensions of business are subject to change, what an enterprise attempts to do, is to maintain the integrity of its identity. This identity is refelcted in its values, mission and embedded in its culture. It is this identity that I believe is the strongest link in the continuity between the past and the future.

Polaroid Images (Fubiz.net)

No other enterprise perhaps indicates the wrenching change it has faced recently than Polaroid. This article in Fast Company, describes how the company managed to pull itself out of a destiny of certain oblivion.

The article clearly illustrates the point I make above. Polaroid ensured that as it found new avenues to redeploy its assets and capabilities in a new context, it also made sure, that its identity, its ‘Brand’, was not compromised.

Great lesson and case here.

The Apple Ecosystem and the Concept of Lock-in

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April 7, 2014

A recent article on cnet discusses Steve Job’s intention to lock-in customers into the Apple Ecosystem.

Steve Jobs

Based on Richard Normann’s work described in his book “Reframing Business“, I have been thinking about the emerging importance of innovating ecosystems of value, reconceiving offerings and value-creation as dynamic processes within living systems.

Ecosystems have many interacting actors that play diverse and complementary roles. Some, such as Apple, play a critical role, that of a keystone, or a Prime Mover, according to the language that Normann uses.

The Prime Mover, orchestrates the system of value, but is not alone in the process of value creation. As much as there are partners, various other stakeholders, including customers as individuals and social groups, participate in this dynamic.

If one looks at the Apple Ecosystem (see image below), this becomes very apparent, that Apple is not the lone player or entity

Apple Ecosystem

(Image courtesy: Judith Vargas)

Here is another image from Time Magazine

Apple Ecosystem

It is clear to me that Apple chose to be a Prime Mover, and had the knowledge and power to shape the ecosystem. The Apple platform is simultaneously an infrastructure, implying a system of proprietary standards, but also a conceptual platform, around which many participants including the users can create value according to their own needs. In the latter sense, it is a Design System, an active offering, that provides a ‘genetic’ code for others to leverage.

Apple’s excellence, among other things, stems from having successfully executed on both levels. It owns the conceptual architecture of this innovating ecosystem, as much as IKEA owns the conceptual architecture of its home design ecosystem.

The alternative is of course an open platform, and there are those, however, so far none have been successful in the same way. Perhaps, there will be another innovating ecosystem in the near future that is based on an open platform. Open systems are very powerful and in the democratized future (Josephine Green of Philips), we will see more of those.

But, whatever be that ecosystem, participating in them is a form of committment – an acceptance of “lock-in”. That is the sense in which Steve Jobs was possibly using the word. In itself that is not a bad thing.

iWatch and Ecosystems

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February 5, 2014

There is much anticipation and excitement around a possible iWatch from Apple.

iWatch and other Wearables

This Fast Company article adds several interesting dimensions to the debate, such as privacy, data security, etc, and whether Apple will become a platform provider for others to build applications on.

Interesting also is the huge focus on personal fitness data and the impact that could have on healthcare.

Wearables are indeed an interesting multi-dimensional opportunity space. The proximity to the wearer’s body and therefore the ability to integrate sensors, the idea of the accessory and its potential for fashion, the notion of an alternate approach to the mobile device – a replacement or an extension of the current mobile device and so on.

There is much happening in this space and it is too early to say how this will shape up. It is indeed interesting to see how much focus there is on lifestyle and fitness. I however, do not yet see a completeness of vision from a user’s perspective.

In this context, I wanted to reflect a little on Apple as a value-provider. I have seen many opinions on Apple and the iWatch – the tenor of most of these seem to be from consumer life-style perspectives – “If you do not give me a gadget that amuses me, you are not much of an innovator!”

By now I think it should be clear to anyone in the technology innovation space, that while Apple engineers and designs beautiful devices, it is much more than a device company. This too has been well-documented – it is often a later entrant and is much more an ecosystem builder rather than just a device vendor.

When it can build a radically different and meaningful ecosystem around home entertainment, it will bring out a TV – when it can reshape the retail experience, it will be there with the entire ecosystem of commerce – not just with a gizmo or a gadget.

Similarly, when the value ecosystem of wearables goes beyond the siloed, health, music, communication worlds into one where it can integrate a meaningful totality for the user, it will introduce the iWatch.

Perhaps in that vision there are technical challenges it has not yet surmounted – but that should not lead us to question its ability to innovate as some ‘gurus’ are eager to do.

The iWatch experience will be centered around a new node in the human digital experience, not some fragmented experience of personal health data, but a seamless integration not only of data with meaning but with the ecosystem of other devices.The issues of data privacy are pertinent but not restricted to Apple alone.

When there is that clarity of an architecture for fluid and seamless integration of experience, and the absolute clarity of a non-superfluous device and a new member of the personal digital ecosystem, there will be an iWatch. In the future this device could cannibalize current incumbents, but it will be done gracefully.

Perhaps that device will indeed create an open platform for others to build applications on. Those applications will again be an important component of the total value proposition.

It is for that completeness of vision that I subscribe to the platform that this company consistently creates. It demands for a larger understanding and comprehension of the idea of design – when you experience it, you know what that is.

A High-Level POV on Innovation

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January 1, 2014

Briefly this is how we think of Innovation, a Point-of-View that informs our work.

  1. The enterprise is a system embedded in a context whose purpose is to sustainably create value and a positive surplus for its stakeholders.

  2. The enterprise system comprises of the following key elements:

– Value-Creating and Capturing entities (aka Business Model/s).
– Offerings that co-produce value with other stakeholders.
– A Value Platform (aka Enterprise), that supports the business models and creates shared resources.
– Business Models also consist of various processes.

  1. The objectives driving the innovation initiatives are often diverse – A business and competitive necessity, desire for distinction, growth or performance improvement.

  2. All the above elements of the system – Business Models, Offerings, Processes and Platforms provide opportunities for innovation.

– While any one of these might be the subject of an innovation project – all efforts maintain the integrity of the whole system, which is why we prefer to start there.

  1. Innovation is as much a discipline as it is an art.

– The Whole Enterprise must participate – It is essentially a collaborative effort.
– The Enterprise must manage the effort with a disciplined approach – ‘Total Innovation Management’ ( this is similar to the notion of TQM, an idea we have come up with).

  1. We focus on the TIM discipline to ensure impact and outcomes.

– The Dynamic capabilities of Innovation are complemented by Strategic and Operational capabilities, all of which an enterprise must excel at.
– It takes time to develop these capabilities and we recommend a progressive focus on growing the maturity of capabilities to take on more ambitious innovation efforts. Disruption does not happen overnight.
– The discipline of TIM is codified in our Methodologies.

  1. The basic approach to Innovating any of the dimensions of the enterprise relies on:

– Developing a deep understanding of the ideas underlying the design of particular object of focus through Modeling (Business Model, Offering, Enterprise, Process etc.) and Validating its viability in a desired context.
– Expanding and Reframing these underlying ideas and principles provide the sources for innovation.

  1. Innovations are interventions in systems (Value Receiving Systems) by systems (Value Creating systems).

– We understand how change and the introduction of something new impacts the creators and receivers of value.
– This sensitivity informs the design, innovation management and execution processes of our methodology, ensuring successful adoption and impact.

  1. We use techniques from the following to expand, design and innovation spaces, to find new and interesting intersections and confluences.

– Foresight,
– Insights (new developments and understanding of his things works),
– Needs (detailed understanding of the needs of those served),
– Drivers (New Developments, Drivers of Change), and,
– Looking ‘Sideways’ to other systems, in order to expand our Design and Innovation Space-Time as appropriate.

The Science of Disruption – A suggested Roadmap to Enterprise Capability

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November 7, 2013

All enterprises naturally desire and intend to be masters of their destiny, which implies not only survival but having an enduring and positive impact within their ecosystem of operation. In addition to delivering value to their targeted constituents, while that certainly constitutes making a positive impact, enterprises also want to grow, generating surpluses for their stakeholders and as insurance against being displaced by competition.

Disruptive innovation is a popular idea in business, and to me it connotes the ability to reconstruct a system anchored around one’s preferred value architecture.

While true disruption is a matter of fundamental reconfiguration around a new paradigm, for the sake of this discussion, we can also think in terms of relative impact – a significant reconfiguration of the ecosystem, even if partial could be considered disruptive.

Disrupters may or may not be incumbents, but to obtain that degree of power or influence is clearly an indicator of being in control of one’s destiny. In that sense, an enterprise would want to achieve a strategic innovation capability that would allow it to master its ecosystem and disrupt it for proactive leadership.

How one acquires such a capability is what this post is about.

Taking on a system and radically shifting its center-of-gravity or reconfiguring it around a new paradigm is non-trivial and therefore building such a capability is not something one can expect to accomplish overnight. However, in order to be a master of one’s destiny, one has to develop such a capability to the extent possible.

The roadmap I propose takes an enterprise through five stages, not necessarily to be interpreted as sequential, but as indicators of a progressive increase in capability and maturity.

Built into the idea of this road map is the notion of three horizons – a short and immediate horizon, a medium term horizon and a longer-term one. The length of the horizons depend on industry and context, but about 3-5 years for Horizon One, 5-10 years for Horizon Two and anything longer than ten years for Horizon Three would be good rules of thumb.

The stages I describe below follow the convenient acronym – BUILD which stands for:

Baseline – Uncover and Understand – Increment – Leapfrog – Disrupt

Increment, Leapfrog and Disrupt correspond respectively to Horizons One, Two and Three above. I do not think of them as sequential, but as together constituting a portfolio of interlinked initiatives, simultaneously undertaken, almost on a rolling basis. As the enterprise matures in its ability to enact significant systemic changes, what constitutes incremental innovation or leapfrog might also change.

Implied also is an overall framework that undergirds the roadmap, a framework for building an innovation ecosystem that learns throughout the process.

Baseline:

One of the first steps in this journey is to develop a very sound and detailed understanding of one’s system. The purpose of this step is to develop a wide and shared understanding of the extended system that is the enterprise. As I have discussed in other posts, the overall system at a high-level comprises of many entities such as:

– The Value Creating System, which includes the Enterprise as a co-producer of value. Baseline models would include business models in their extended form.

– The Value Receiving System, of which the enterprise is also a part, in its role as a co-producer but is primarily constituted of the clients or the receivers of direct value ,

– The internal context in which the enterprise operates, including its governance, its strategic architecture that describes it mission, vision, and key stakeholders

– The external context including its industry, the competition, regulatory bodies etc. and,

– Any other external entities that might have a bearing on its ability to realize its purpose.

Uncover and Understand:

The roadmap to developing the ability to disrupt substantially relies on a deep understanding of the underlying assumptions and beliefs that inform the design of the enterprise. What the baseline describes is one realization or manifestation of these assumptions.

The continual questioning of these assumptions at their deepest levels are the true source for expanding and broadening the potential spaces for innovation, some of which could lead to disruption.

This therefore is a crucial stage in the evolution of the enterprise. The purpose is to build shared models and expose the under-structure of the enterprise, so that it can serve as a reference for analyzing impact of changing contexts and emerging opportunities.

All the subsequent stages described here below, are first attempts to broaden this space and identify in it locations for creating innovative value. Every dimension of this space is a possible vector for exploring innovation.

While, I refer to it here as a stage in the road map, in reality, an enterprise constantly endeavors to expand this space adding new dimensions to its definition and by stretching its boundaries.

Increment:

This stage also corresponds to what I termed earlier as Horizon One. While the enterprise certainly must keep an eye on the long-term, exploiting opportunities on hand in the short-term provide a foundation on which more complex capabilities are built.

These short-term opportunities provide valuable learning experiences and returns. However, they may not necessarily contribute directly to a future disruption.

Leapfrog:

The idea of Horizons implies the ability to look towards the future. While Horizon Three opportunities are not completely certain, there are many opportunities that can be considered emerging at any point of time. These are opportunities that show early promise and the enterprise must develop the ability to identify such avenues and exploit them to early advantage.

While such innovations might not be considered disruptive, they can become a source of distinctive competitive advantage and allow an enterprise to leapfrog the competition.

Disrupt:

Some of the literature on disruptive innovation illustrates how under certain conditions, new ideas can penetrate an ecosystem, ‘under the radar’ in a manner of speaking, and eventually lead to disruption.

While that is certainly true and possible, the approach I describe is based on developing the ability to disrupt by design. Intentional disruption is founded in a mastery of the dynamics of the system, a deep understanding of its mechanics and leverage points. Systems of our interest are often socio-technical, and fundamentally human. It is that multi-textured insight and knowledge that allows an enterprise to expand its innovation space and shape the configuration of value.

In Closing:

There are many systems in our world that are dysfunctional and good candidates for systemic innovation and disruption. In a separate post, I will review recommendations on how one might successfully undertake such innovation.

It suffices for now to understand that the capabilities that an enterprise has deliberately built through this road map will position it to take on such a challenge.

We need a new perspective alright.. but..

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October, 30, 2013

I came across a nice blog post by Peter Vander Auwera about disruptive change and how it points to a new humanism in Banking.

Disruption is on everyone’s mind and in this case the reference is to the accelerating change in the industry along many dimensions. Clearly people are challenged to figure out how to respond and not just in the Banking industry.

The question is, how does one respond to such complex and multi-dimensional change? In the post I refer to, the author argues for a response based in humanism, which as he describes towards the end of the post is about ‘relationships, intimacy, depth and human connection’.

That sounds quite similar to the argument many in the Social Business world are making, and a recent discussion seems to suggest there is some disillusionment creeping up there. I will discuss that issue in another post, but some of that disappointment expresses frustration in that – the argument has not found much traction. Does that just mean that enterprise leaders do not care?

I want to reflect on the notion of responding to complex external change that I have an acronym for – VACUUM! Volatility, Ambiguity, Complexity and Uncertainty we are familiar with – I added Unmitigated Mess to those four, for that is the intractability we often find ourselves dealing with.

I think it is indeed important to think in human-centered terms – in fact, a post I wrote earlier today, talks about Value Receiving Systems and these are indeed social systems as much as they also have technological and other dimensions.

But the idea of value that is solely defined in human terms does not quite convince me.

The architecture of value is complex and has many dimensions. Some of these dimensions indeed are social and correspondingly human, but they only form a part of the total narrative. Nothing in this complex world today points to solutions in any one dimension.

We must learn to see things systemically and create systemic value solutions with enterprises that are in themselves complex Value Creating Systems, if we intend to be able to master this complexity and obtain successful outcomes.

Beyond the Surface – Pointers to the need for Business Reinvention

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October 30, 2013

Often when we think of advertising, we think of it in terms of the conventional purpose it serves – to inform and influence a target audience. In the context of branding the discussion does become broader and starts looking at the whole business model, the value proposition, the reputation of the enterprise and its ability to deliver among other things – a more holistic and systemic view. However, we do not often hear of that discussion leading to the topic of business invention.

With the radical and disruptive revolutions all aorund us in the digital world that touch all aspects of how consumers relate to information and thereby a company’s value proposition, it is hardly surprising that the world of advertising is undergoing rapid change too. The Fast Company article – ‘The End of Advertising…’, describes some of the key elements of advertising that will be different in future:

  1. From Integrated to Connected

  2. From Brand Story to People Story.

  3. From 360 to 365

  4. From Media disruption to Business Invention.

Each of the first three bullets points to interesting insights into how things have changed in our understanding of how people behave and relate and particularly phenomena that have become significant in the digital universe.

Each understanding when taken in isolation, such as the need for deep connections, the importance of touching people through stories, ubiquity of connections in space and time, creates creative advertising options such as are described under each of those bullets separately.

It is the last bullet about business invention that particularly caught my attention.

“Creativity and innovation are about finding unexpected solutions to obvious problems or finding obvious solutions to unexpected problems. We should use our creativity to provide better businesses and solutions rather than constantly trying to disrupt what people are doing.

Campaigns or products, if they are not worthy of people’s time, will end up polluting the world–literally and metaphorically. As we forge ahead into the post-digital, all-mobile era, 360 Degrees of Integrated Campaigns to tell Brand Stories via Media Disruption may no longer be as effective–and quite frankly, as necessary – as we thought.

Brands should aim to solve real problems by providing Connected Services over 365 Days and by Inventing new Businesses that benefit People, not just the Brand.”

The insights described in the first three bullets become one of the sources for expanding the space for innovative business designs. In the ‘FINDS’ framework for where to look for opportunities, it is the ‘I’ for Insight.

Business Reinvention

There are many sources of potential disruption to business models today. If we only pay attention to one of those in isolation, we might indeed enjoy temporary advantage.

However, the ability to create enduring advantage requires a systemic approach – a need to synthesize the various insights gained from trends, foresight, internal assets, and looking ‘sideways’, to create disruptive business models.