I’m becoming a fan of standards

I never thought I would, structure and constraints aren’t really my gig.  However after reading some of the great blogs by Simon Wardley, trying to deal with an industry that doesn’t have any currently and some personal experiences, I’m changing my stance.

At a personal level, i’ve just completed my second order through Charles Trywhitt for business shirts. Yep i buy my shirts online (you should too, they are bloody good shirts, bloody cheap) . I CAN do this because unlike woman’s clothes there are standards, much to my wife’s annoyance.  Same collar size, sleeve length and chest the world over. Aka a standard. I can buy the shirt trusting it will fit. (apparently due to the advent of vanity sizes -aka lying to the lady about her true size – this is no longer the case in woman’s clothes).

Another example, air travel. Pretty generic activity.  Lots of websites doing the same thing, funnily enough, not always in the interest of the customer. Check out this from expedia


And then I went direct to AirNZ’s website to validate the pricing

Whops…. $2k more to fly on the same flight, same airline…. something i caught because now the power is in my hands to check and find possible itineraries… because I can put in the destination airport code and time now instead of an agent…

At a work level, I’m trying to figure out how to get our company to buy fibre products off 4 different providers. All of which have different ways of ordering, providing, billing, managing and implementing their product… IT folks scoff at network heads, they shouldn’t. Its bloody complicated and for the most part they have solved a lot of the technical challenges you guys are grappling with in Cloud land.  They didn’t get the business model transformation part right, but neither are many of you.

At an innovation level, now I (at least partially) understand Simon’s model, I can see how standards drive componetisation which in terms commoditises activities… and in doing this you see a wave of innovation at high levels in the ecosystem (on top of the commodity).  And i’m beginning to see how this can work in my favour a lot more.  I was talking about an idea with a friend, and he off his own bat said “now cloud is here the physical cost of the new service is really small now…  barriers to start up have gone away”, and in doing so more and more folks are innovating on top of it. Very cool when you can benefit.

Next time you see a standard emerging, think through how you can best make use of it.

The two types of innovation

Innovation gets gets so much hype in just about every industry, that you would realistically think that more people understood the basics… I don’t see it. Am i an expert? I’d like to think i’ve at least done enough to understand the basics, so here is some wisdom.

The first type of innovation is incremental innovation. The is the stuff that most companies are built to deliver (in some cases not!). The tweaks and product improvements that we expect. In fact, any enhancement that increases performance of the current business (using Druckers definition) would fall into that category.  Its the stuff that gets talked about in universities a lot with the theoretical ‘when we hit the maturity phase we’ll keep growing by adding features or selling to a new segment’ type stuff.

You need this type of innovation when you are a mature company. In fact without this kind of constant evolution, you will in the end become obsolete (Red Queen‘s hypothesis )

“It takes all the running you can do, to keep in the same place.”

As a senior manager, your job is to truthfully evaluate the companies performance. There are sign’s when you are doing this kind of innovation well enough, and when you aren’t.

Clearly those peer organisations on the right aren’t keeping up. I have no doubt they are expending lots of energy trying, but clearly its not working. And senior people should be seriously asking why its not working, what can be done differently and how can they get better returns on their effort (see my previous post on translating strategy into reality)

“Faced with the choice between changing the way we do things or finding facts to refute the strategy, most people get busy finding facts.” My take on a quote by John Kenneth Galbraith

The second type of innovation is disruptive innovation. Nirvana, the one big hit everyone strives for. This is way harder to do (this blog is littered with posts about it).  Essentially you are trying to launch a new product category (walkman’s, cloud computing) or targeting new segments of consumers (mobile phones).

In doing this inside a mature business you are battling everything.

  • The culture “the way we do things”,
  • Process’s – we build things this way…
  • The resource allocation process ” must make the same margins, must hit the investment hurdles”
  • The skills of the company ” we’ve lost the skill innovation ” ahem Google / Cisco
  • Priority – the rule of large numbers always wins
  • Personal agenda’s – mid-managers putting forward risky bets

And don’t forget, you still have to battle the market! Actually build and launch that product, convince customers to buy it, recommend it…  Like is said, this is tough,

And it takes time.  My observations of senior leaders is that they treat innovation like kids treat Xmas toys, they are over the excitement of the idea by day 2.  Want to know how much time? And for that matter, want to know WHY you would even bother given its sooooo hard… check this  graph out

Yeah i know, its Apple. But here are some other companies that have done this. Nokia (when they went from pulp to phones), Lego (themes!), Amazon (books to cloud!), Caterpillar (shoes)….

“We also found that business model innovation tended to generate bigger gains than product or process innovation”

Jens-Olaf Berwig, Nathan Marston, Lauri Pukkinen, and Lothar Stein – McKinsey & Co

In other words, if you are the CEO and want to seriously change the total shareholder returns, you need a disruptive growth plan.

Also, if you are shareholder, and you don’t hear the CEO talking about this, don’t have decent visibility of what the company is investing in…then you are investing with the herd…  maybe keeping up, maybe (Sony, Google, Cisco???)

Signs you have problems with growth.

  • Everyone’s frantically busy, but nothing gets launched
  •  Your have spent the last month trying to find a spot in peoples diaries to discuss prioritisation
  •  You go on holiday for a month, get back and nothings changed
  •  the board/ CEO talk about the need to innovate, not the innovations
  •  You use the word cannibalisation
  •  You have to model the impact of new products on old revenue lines.
  •  Yon can’t describe to a 3 year old what you’ve done today to launch something
  •  you hear people talk about managing their inbox like it’s an achievement
  •  You can’t describe what your last major product release was
  •  You hear the words ‘ that’s how we’ve always done it’ or ‘we don’t do it that way here’
  •  you cannot describe which clients you serve and how you do it in less than 20 words
  •  you spend more time on the process than on delivery
  • There is only one process for launching new products
  •  you need a strategy to  size the opportunity (  hint: if it can  be sized or planned out…. it’s already too late)
  •  meetings have 10 or more people in them, and it’s not the project team (it’s the business)
  •  You don’t Know what the meeting was about and what the ‘business’ actually do
  • you talk about managing decline not product life cycle management
  • You have the same people running the big revenue lines and launching the new, cheaper substitutes
  • the words ‘supertanker’ are used to describe delivery —- sometimes with pride

Thinking like a 3 year old…

I am continually struck by the way my 3 year old views the world.  There is a pureness of insight that we adults have lost.

Example – this morning we were discussing how big she is growing, I was praising her for eating well and sleeping (my world view, what I  valued) her responses..

“If I stand on my tippy toes i’ll be bigger…. or I could stand on a stool …. or wear mummy’s high heel shoes”

Profoundly simply solutions to her desire to be bigger….

Then when I got into the office, what was the first thing I noticed?  A woman in very high heels, but was still only 5 ft tall…. someone else trying to be bigger (something far from unique) .. as I said before, insightful.

Like every other 3 year old, she challenges our world view with that deeply confronting question “why”.
It can be frustrating, but mainly because it challenges me to communicate ideas to her in ways that relevent… that is have reason… genuine reason.  This process of asking why has been adopted by business , but I think we under use in in innovation terms. If you can use the 5 Why’s analysis method to articulate your proposition in words that have meaning to a 3 year old, you probably have a winner… I’ve tried this with some of the stuff we have going on at work, an experience I would recommend.

Finally, thinking like a 3 year old in the actual development of products can have huge benefits. I’m not alone in noticing this,  the best performing teams in the marshmallow challenge … are kids her age. Why? (pun intended), because

that none of the kids spend any time jockeying for power. Kids aren’t trained to be CEOs of Spaghetti, Inc. In their world of play, they build successive prototypes, failing fast, laughing and learning along the way.

In other words they checked their egos, worked together, tried things out really quickly and kept on iterating…

We adults have a lot to learn .

The thing that makes great companies great is…

I’ve spent quite some considerable amount of time investigating what makes great companies great. Readers will know that i’ve read a lot of Clayton Christensen, but i’ve also interviewed CEO’s and been fortunate enough to hear some great speakers, or been past great tit-bits via various social media.

Here are the key takeouts that appear to make great companies

  1. They have great leaders, people who are prepared to make decisions even hard ones, and act
  2. They have a cause, purpose or set of common belief – wheather that is competitive, aspirational or humanitarian
  3. They take risks – the culture supports risk taking (ie doesn’t punish it at the very least), and these companies are prepared to do things that make the sharemarket shudder (let go of legacy money streams or beliefs)
  4. Great companies get the right people on the job and give them the autonomy and support to get the job done – and are prepared to loose today’s key personnell in order to get tomorrow’s business
  5. To get results you need to free up resources – expecting people who have day jobs and targets to hit to be the agents of change is insane…
  6. Organisations are conservative – they unknowingly become uniformaty machines systematically erraditcating anything that doesn’t fit with the entrenched model or way of doing things. Middle managers become experts at the ‘considered no’ to new ideas, and its for this reason organisations can’t grow and you hit stall points. Fear typically beats creativity, fear of career limiting moves, punishment or even of fame.
  7. When it comes to innovation, the more perfect your knowledge, the less attractive the innovation is. If you’re feeling comfortable with an idea, then someone’s already doing it…
  8. If you are serious about change, you need to invest in it.
  9. As scary as a seperate spin out is to the CEO, these are about the only proven way to build a new business model.

And now for a collection of my own thoughts

  1. Companies love a crisis – nothing will happen until it absolutely must – but by then its too late so..
  2. Business is about momentum – its much easier to make small changes in trajectory than to pull a business out of a nose dive….
  3. What seems like a big scary decision now, will look small and logical when you look back at it. So get on with it
  4. In doing this, remember that the people that go you into the current situation, aren’t the ones that will get you out – turkey’s don’t vote for Christmas and neither will they like you telling them that their time has past…
  5. If you want to do something new, get someone in who has a history of doing that new thing – whether thats dealing with decline, new product growth or product launch…. assuming your capable people can do it is wrong
  6. Often doing nothing is the absolutely worst case…even going the wrong direction is better because at least you are in motion

And finally, the only thing that really makes a difference is execution. You can collect as much information as you like, get all your best thinkers writing documents till the cows come home… the reality is that the only thing that really matters is executing better ….

The best companies in the world do this better than anyone else

my presentation at cloud camp


If you want to see the 5 minute lightning talk I did at Auckland's Cloudcamp, here is the link.

 Unfortunately you can't see the slides (i'll try to get them up) , but the topic was about the proprietary vs opensource debate in cloud computing … with an innovators slant.





Is a matrix structure the enemy of innovation?


Clayton Christensen first highlighted the role of middle managers as innovation killers in the Innovators dilemma.  He did it gain with Michael Overdorf in their great paper called “Meeting the Challenge of Disruptive Change”.  The basic premise is that middle managers don’t back truly disruptive innovation ideas because they are either seen as a large career risk, or they have such uncertain (and usually) smaller returns compared to the incumbent model that the idea is deemed ‘ not worth it’.


This is a phenomenon I've seen in action, so its fair to say i’m a believer… But i’d like to add to it.


Middle managers, by default exist in large organisations. Small companies don’t need them…. And almost without exception, large organisations operate using a matrix structure. I think that Matrix structures are also one of the big inhibitors of innovation…. Why??


Well think about it, by definition in a matrix structure, you might end up with 5-10 managers around who are all peers! They are equal, and because of this everyone thinks they have a say…It is actually much worse in some instances. If these peers don’t like the decisions the majority make, they will re-litigate or actively torpedo initiatives.   Unless you make the conscious decision to allocate a leader, they matrix actively democratises decisions….


In my humble opinion, this democratising affect essentially takes the ‘middle management innovation killing phenomenon’ and multiplies the by number of peers around the table…

Doing the hard stuff.

Jim Donovan post today highlighted the worlds top 50 business thinkers. The thing that struck me about this list is how many of the folks there are responsible for creating the theory of business growth, or for delivering it.  Why do they get this acknowledgement and respect? To me, its because these people do the hard stuff.

Growth is far harder to achieve than most of us are willing to accept. There is a bunch of research that highlights that the perennial growth story for any company is fiction. For example, Creative Destruction by Forster & Kaplan highlights that most companies not only fail to grow, but only a small percentage (16%) actually survive !  

Stop and think about that…. for 84% of you out there working. You are in companies that are dead men walking. 

Got me thinking about my own experience. You might have noticed, I’m a growth guy, I’ve even been called ‘Mr Disruption’ by some folks. Others think of me as a destroyer of value, god knows what they call me. 

What I do is hard, I’m constantly fighting the  machine  to get things done.

There is an almost religious battle going on. When I talk about disruptive innovation , the incumbent minded folks hear creative destruction.  I look forward and see opportunity, they look backwards and try to pinpoint the death knell (like the internet). Ultimately I advocate that we need to grow,  they counter it saying we need to cut costs. 

Heads up people. Cutting costs is the easy thing to do, giving a considered ‘no’ to new opportunity is simpler than taking it on.

Well here’s the rub, look at the stats from Foster and Kaplan (there are more**). If you are focusing on doing the easy stuff, something else becomes easy. Predicting the future of your company.


** Profit from the Core, Zook and Allen.

Blue Ocean Strategy, Kim and Mauborgne;

Good to Great, Collins

Stall points

When in hole, stop digging!!

I use this little maxim all the time, usually for personal reasons (i’m in trouble with my wife). What continually staggers me is how little the logic of it is applied by businesses and business people. There are plenty of variants. ..

"Stop going to the same well"

"What got us here won’t get us there"

"It’s time to change the game"

They all mean the same thing. What you are doing isn’t getting you anywhere so why bother? Try doing something new.

As employers & shareholders we see cases of massive fraud like Madoff & Allen Stanford and wonder how it happened. Well at its simplest, they did something illegal & either didn’t get caught (Madoff) or it didn’t work out. Whatever, the point being that they kept right on doing it, continuing to dig themselves into a bigger hole.

Unfortunately this behaviour isn’t limited to a few renegades, it is evident in its legal form too. It’s called ‘Current mode of Operation’ & it exists in way to many companies & I’m willing to bet it is a far greater scam than anything any one person could achieve.

Many companies still believe that the things that once made them successful will help them deal with the future.

It’s a myth. Stop perpetuating it, stop wasting time resources and money on repeating what has become an obsolete business model (after all, if things were going so well  why are you doing something new??) Instead have a genuine crack at doing something new. New isn’t just the end thing, it’s the END to END thing….

If you are struggling to change your business, look at the WAY you are trying to make it do this. Dollars to doughnuts you are applying the processes, technology & mindsets used to solve OLD problems to solving the NEW problem. That is to say, you are still digging. . .