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The Five Obstacles to Growth

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May 12, 2016

In the course of my work helping enterprises design breakthrough solutions to impact and growth, I have found there are five general patterns that help us understand why an enterprise might not experience growth, or if they do, why that growth might not maximize its true potential.

The five inhibitors, may not all apply to an enterprise, and while they suggest a logical sequence, an order I use when thinking about a new venture, these are better thought as inter-related ideas, that together provide answers to five questions that correspond to these statements.

Often, it is likely that one might only be looking at the implications of change in the Context of the enterprise and the opportunities or risks it creates. Or, we might just be exploring the opportunities created by new approaches to Design. However, to truly maximize the impact of any of these interventions, one must invariably look at whether all these issues have been satisfactorily addressed in a systemic way so that they together maximize the opportunity to realize the true potential of the enterprise.

  1. Enterprises do not understand themselves well enough.
    A Living Enterprise, a dynamic co-evolving entity, is the expression of an idea. The idea originates in a cognitive frame that describes its understanding of itself in relation to its context and the systems it serves.

If the enterprise is new, as in the case of a startup or a new venture, it is the idea that expresses the entrepreneur’s vision for what needs to happen in order to change a target system.

If the enterprise has been around for a while, the frame is refined and over a period of time is reinforced by its experiences and learning in the course of its operations.

As its routines get increasingly codified over time and knowledge becomes refined and specialized, the committment to the frame becomes stronger. It is quite natural too, that these frames become invalid, a fact that reflects in sub-optimal or dysfunctional results.

It is in this sense that an organization needs to deeply understand the foundational ideas and frames on which it is designed, and regularly examine their validity, a need that is becoming urgent and more frequent given the acceleration in change we are experiencing now.

Frames inappropriate to a current and/or evolving context are one of the most powerful obstacles to growth. When we find ourselves at such dramatically evolving moment in history, such as the one we are in now, there is an urgent need for something I call a Frameshift.

  1. Enterprises do not understand their Contexts, Capabilities, and most crucially, the Creative Value Ecosystem in which they play a role.
    All value is dynamically co-created by participants in the Creative Value System of which the enterprise is a part. Value is created at the intersection of the Creative Ecosystem with the Context in which it operates and the Capabilities that various particpants bring to the process or can leverage.

A deep understanding of all these three interacting elements is crucial to maximizing value creation. This understanding also needs to be dynamic in order to understand how these things have evolved to the state they are in at the present moment and more importantly, how these will potentially evolve in the immediate and distant future.

Understanding the Creative Ecosystem involves understanding the organizational relationship between the various entities and stakeholders that interact and orchestrate resources and capabilities to co-create value. It is that co-creation which originates in and is aligned with the foundational frame and is the basis for the Enterprise’s Mission.

It is obvious that the Creative Ecosystem is embedded in a Context, all the inter-related entities that lie outside the defined boundaries of the Value Creating Ecosystem but have an influence on the value creating enterprise. The competition within the industry, the economies and societies in which the systems find themselves are all dynamically interlinked and evolving too. Understanding the dynamics of these superordinate systems, the trends and drivers operating now, and the vectors of change that will shape them in future must inform the approaches to growth.

When these have not been systematically examined and understood, they carry within them the potential for surprises and risks, but more importantly latent opportunities which could become the engines for growth.

There is within them a flux which the savvy entrepreneur anticipates and capitalizes on.

  1. Their interventions in the Value Ecosystem, manifested in their Value Propositons and through their Offerings, are incomplete and temporally inflexible.
    The Enterprise brings its vision of the new value creating system into being through its value proposition and offerings.

Without going into much detail about value propositions I want to emphasize that these should stem from the understanding that enterprises are co-creators and participants in the value creating ecosystem. The extent of participation might vary, but the propositions must add to and complement the existing or desired value creation processes and systems, which are dynamic and evolve over time.

The offerings form one of two key interventions an enterprise must execute in order to realize its mission to bring about positive, distinctive and enduring impact.

In additon to its offerings, an enterprise must also, at least in its early stages, before it becomes a viable enterprise, consider the interventions necessary to shift the existing ecosystem or build one ab-initio around its own idea.

It is in that sense that the intervention might not be complete. Further, this latter intervention demonstrates the enterprise’s mastery of Systems Innovation – the ability to navigate and bring about a change in a complex system.

Temporal inflexibility has been addressed in ideas such as agile and adaptive to some extent. However, it also implies linking offerings to changing frames discussed earlier.

  1. They do not design well.
    I am talking about hte process of designing. We have mastered the processes for designing products, services and business models perhaps. The practice of Design Thinking has caught people’s imagination and there is increasing interest in that practice as well.

What then do I mean when i say that Enterprises do not maximize their opportunity when they do not design well?

I think of design differently in this context. Design is that ability to bring multiple lenses and perspectives to any situation, and reconcile the deliberate parallax so created with multiple capabilties, hitherto not leveraged in the traditional practice of design. Some of those capablities are latent within the participants in the ecosystem – we need to learn to see and recognize them. We need to think beyonf designing products and services in the emerging context of cocreating value ecosystems. We need to be creating Design Systems and Architectures that empower and enable particpants in the ecosystem to become those cocreators of value. We need to turn the Value Ecosystem into a coevolving living enterprise – a living engine of value creation.

This perspective is in my opinion the true meaning of design thinking, and we need to do this collaboratively. That is when we design well.

  1. They do not Practice being a true Living Enterprise.
    The Living Enterprise is a dynamic co-evolving entity in my argument as I have made amply clear by now. Practicing being such an enterprise implies that all of these things that we describe here that drive growth and impact are not activities that one undertakes once in a while – they are embodied in practice. It is when and only when we become such practitioners, can we sustainably deliver enduring, positive and distinctive impact and growth.

To Create or not – is no longer the Question

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October 14, 2015

In my previous post, I made an artificial distinction between Value Creating Systems and Value Receiving Systems. That distinction caters to our extant way of looking at the world in terms of enterprises that create value and its customers or receivers.

However, useful as that distinction is for practical purposes, it actually distorts our understanding of the process of value creation. And in fact, in a world of extensively networked extended enterprises, the boundaries of an enterprise are no longer easily distinguishable (Rachel Happe rightly brought up this point in a comment on my earlier post).

A note: Value and its associated generative systems are contextual – the system that creates value for health being different than the one that does so for education, for example. All participants/stakeholder in any ecosystem are active contributors to the value created – and to the extent that they intend to remain viable members of the ecosystem, their contributions need to be at a minimum – positive. Thus all value is co-created by all the participants or stakeholders in the particular ecosystem.

As an enterprise, we often tend to see the process of value creation and delivery coming to an end with a transaction or a little beyond that at most. There is now a substantial body of work that understands that value creation continues way beyond the customer’s contact with the enterprise.

In fact that process, actually begins before the customer even comes in contact with the enterprise and continues over a lifecycle of value well beyond the contact. And during this activity of value creation from the subject’s viewpoint, many stakeholders other not related to the enterprise contribute. One way of thinking about this is that, the subject creates value, whether or not the enterprise exists.

And as my friend and colleague Doug McDavid consistently maintains – all these participants are engaged in the production of services – a view that aligns with the notion of Service-Dominant logic (as against a Goods-Dominant logic view of the world). This is the critical shift in perspective that we need today.

Having understood this, an enterprise has a choice as to the extent it wishes to become an integral part of the co-creating ecosystem – a strategic decision. and one that requires a transformational shift. While in the past, it made sense to remain outside the ecosystem, and therefore have essentially hands-off transactional relationships, as the locus of value creation increasingly moves to the empowered end-user/producer, enterprises must consider becoming a part of and equal partner in the value creating ecosystem.

In all value ecosystems the co-creation of value involves an architecture of value, something I had referred to in my previous post, and a grammar of value construction – a grammar that is available to all stakeholders. This grammar and its associated rules for the construction of value, constitute what I term a ‘design system’. Any participant has access to this system, and they may use its components, grammar and language to construct value as appropriate.

This design system thus serves as a platform empowering all participants. I am using the term platform here in a broader sense than it is used in the context of digital ecosystems. All ecosystems in my description have platforms that specify and coordinate the production of value. This does not preclude the existence of multiple platforms and corresponding design systems.

The enterprise as a participant, that chooses to participate in the ecosystem in order to make a positive value contribution, can also choose to provide leadership, envision an ecosystem of value creation and provide a platform that enables not just one target within the ecosystem, conventionally termed the customer, but recognize all the stakeholder participants and support them all.

This is the other choice enterprises can make – to envision a healthy ecosystem and to choose to be a platform provider.

In summary, value ecosystems include many stakeholders other than the enterprise, who provide services to the ecosystem and together participate in the overall creation of value. An enterprise can choose to be a part of this ecosystem or have a hands-off relationship to the process. Should it become integral to the ecosystem it could also become a platform provider and create the grammar for the language of value creation in the form of a design system.

Making Design a Business Priority

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October 11, 2015

Design is on everyone’s mind – has been for a while, and it is heartening to see that it continues to be so. While we know all the big names in design, those who like IDEO made it a household term, we now see others such as IT services companies of the likes of IBM and Infosys, and Management Consulting companies such as McKinsey champion it.

Mahin Samdhani, VP of Experience at McKinsey Design Labs was featured in a McKinsey Insights article. In an interview he talks about the need for businesses to make design a priority, what that implies and how to create an organization that leverages design. The article has a tenor that is similar to what one could expect if this were an interview with a design leader in any another services company that advocates design.

Briefly, this is what the article and the interview says:

There is evidence that companies that practice design or have made design an integral part of their strategy have not only delivered better outcomes for their customers but also have performed better on other indicators and created stockholder wealth.

If that is true, he asks companies to examine how they treat design and designers themselves – such as, the extent of influence designers carry on decisions as indicated for example, by their seniority in the organization.

He talks about the need to understand customers deeply and to put a lot of focus on truly understanding and solving their pain points. Focusing on lifestyles and experiences are the other two other commonly heard elements of advice.

When it comes to creating a design culture, he talks about the fact that companies need to make internal changes in the way they operate, their processes and systems in order to leverage the opportunities that come with becoming design-centric.

Here are my thoughts on these points:

These are all arguments we have heard for a while – that design delivers business advantage, that it is about customer-centricity, new dimensions of value such as experiences, and that one needs to foster a design culture that respects designers and gives them influence in the organization, while getting the whole organization to become design-thinkers.

I come away with the feeling I have now held for long, that there is something missing in this line of thinking.

The universe of design within any organization is vast – it touches not only what I prefer to call offerings that might include products, services, or a combination of the two, but also includes the systems and stakeholders that create that value, the business models that ensure that the value is captured, the processes and systems that deliver that value and so on. Yet, reading such articles, with their emphasis on customer-centricity, I think this more pervasive need for design in any enterprise is deemphasized and ignored.

Secondly, there is an implicit assumption that because one has ‘understood’ the customer, good design will result. I do not believe that such an outcome is an automatic correlation of the ‘understanding’. In fact, if there is anything that distinguishes design leaders from others that do or do not practice design, is their ability to translate what they have understood into offerings, systems and enterprises that make an impact, and deliver Positive, Distinctive and Enduring Value (I use the acronym VIPED – to bring these ideas together).

The operative word ‘understand’ is mostly described by the champions of design, as a data-gathering exercise, a result of open-minded observation and deep immersion. True, that is indeed important, but data gathering is but one stage. What follows is what makes the difference.

We all know what cognitive models do to what we see and how we learn. All enterprises have a history, they have a point-of-view about the world – frames through which they see reality. These extend way beyond their products and services to the extent that they are an integral part of their identity and sense of being. Those frames cannot be easily set aside, and reframing is non-trivial.

Even if one has an opportunity to get the frames right, the dots that connect the observation of the pain points to insights and eventually to good design too are non-trivial.

Nowhere do such recommendations talk about what that involves – the needs for understanding what value means, understanding ecosystems and systems and their dynamics, the many dimensions of the systems, such as Social, Technological, Economic, Environmental, Political and Values (STEEP-V) that one must understand. One must understand the different ways change manifests through these lenses, the implications of trends and likely futures on what one designs so that it has enduring value. There is almost no mention of creating offerings that are design systems in themselves – platforms for value co-creation within stakeholder ecosystems.

These are some of the reasons design cultures are hard to build. This is why one sees a lot of disappointment and disillusion with the word.

For, important, urgent and critical as it is – one needs to look design in its face and understand that enterprises that truly want to embrace design, must also think of it simultaneously as a strategic design challenge.

Else, it will remain a cosmetic effort. Skin-deep at best, It will not deliver positive, enduring and distinctive value and make an impact.

Innovation Fails Because…

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2014

The widespread interest in innovation is also combined with a sense of frustration. Many studies show that the success rate for innovation initiatives is not very high. Umair Hoque recently conducted an interesting experiment on Fast Company. He asked readers to complete the sentence – “Innovation Fails because…..”

Many people responded and continue to respond – Here are some recent results. The article lists the responses in the form of a running list. That is not very helpful, since I would have preferred to see the patterns, if there were any.

Some time back, I had shared a couple of presentations on Slideshare – “Modes in Innovation”, and “Innovation Praxis”. I decided to evaluate these responses using the frameworks I had proposed. The analysis is in the embedded document here below:

Failure-of-Innovation.docx

The classification of the responses in the various categories is not absolutely perfect or accurate, but it is a fairly good first approximation.

What is interesting to me is how people perceive why innovation fails. A disproportionate number of responses attribute the failure of innovation to issues related to what I would call innovation culture or ‘Practice’ in the terminology of our framework, with some attribution to poorly designed Programs.

What is even more interesting is how many of the other issues that actually contribute to Innovation success, such as proper Framing, Mobilization or Staging are or are not mentioned. There is almost no mention, for example, of the importance of Discovery – assessing what the current conditions are and whether or not the systemic elements that would contribute to success are present.

Culture is indeed one of the most important cause of failure across an enterprise. However, I hesitate to put all the blame on the shoulders of culture. There are many other factors that are necessary to ensure success and it is quite clear from this set of responses that people are not widely aware of what those might be. Some of the people who perhaps should know, such as the authors of these articles and Fast Company, should perhaps structure these responses and provide guidance to people to see how their understanding lacks a total systemic understanding of what innovation is. What use are such surveys otherwise?

Innovation fails because people do not understand its systemic nature and are not aware of the factors that need to be paid attention to in order to make it succeed.

Digital Innovation – A Concise Take

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July 24, 2014

This is a very short take on what I think is the essence of digital innovation:

We can now instrument ever smaller parts of the world, make trapped facets and attributes of this world fluid, autonomous, smarter and sometimes even intelligent. We can interconnect our world for meaningful communications, transactions and commerce, and through these interconnections, relate to our humanity and sociality, and reconfigure these relationships in real time and often on the fly, making this world of ours transparent and accessible at all scales, through simple ubiquitous interfaces where the interaction at all touch points complements our being and creates extraordinary experiences.

NewImage

(Image Source: http://bschool.pepperdine.edu/studentblog/wp-content/uploads/2013/09/digital-innovation.jpg)

Now that is a mouthful and more – but that does it for me!

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.

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.