Friday, November 20, 2020

Preparing for the Roaring 20s

 One of my favorite quotes is from a philosopher named George Santayana.  He said that those who cannot learn from history are doomed to repeat it.  I think we are at the cusp of repeating the past, so it makes sense to review a similar episode in our past so we can better prepare for the emerging future.

A quick look back, about 100 years ago, would suggest that our populations and economies may be on the brink of repeating the Roaring 20s.  Only this time it won't be Gay Paree, flappers and jazz music celebrated by World War 1 veterans.  It will be an entirely new crop of veterans - young adults who have been locked down in COVID induced misery, who bear some economic and psychological scars, and who have lost time and loved ones to a deadly virus.

Mark Twain also had something to say about history.  He said history does not repeat itself, but it does rhyme.  I think he meant that many of the characteristics of the past recur in our present times, in similar fashions if not in exactly the same way.  What I am calling the Roaring 2020s may demonstrate that rhyming characteristic that Twain described.

Why the "Roaring 2020s"?

The original Roaring Twenties were a result of the end of the First World War, the end of the Spanish Flu pandemic and a reaction to an economic depression that followed the war.  Millions of veterans returned home to live new lives. Some experimented with new lives in new locations.  One of my favorite books - The Razor's Edge - describes a young man who was injured in the war and it changes his life and perspective forever, much to the dismay of his friends.

In those days, attitudes and perspectives were radically changed.  The old hierarchy was being challenged.  Governments and generals - entire generations of leadership - were being called into question.  People did not want to live the lives that had been originally set out for them. After living through the war, people threw off the old ideas and expectations and lived out loud.  It was a short boomlet in reaction to the previous conditions that ended in the Great Depression in the late 1920s.

I think we are primed for a new Roaring 20s, which will be ignited by the wide distribution of a COVID-19 vaccine.  Like many of the people in the 1920s, we will emerge from a long period of turmoil and lockdown, ready to get out from under the unrelenting pressure of the virus and the lockdowns it has created.   

What are the parallels?

The original Roaring 20s were sparked by young people who were ready to live an entirely new life, tired of war, disease and old ways of thinking.  They live life to the max, breaking with traditions and creating new music, new literature and new fashion.  At the time, many older adults felt the younger generation were living too fast and too loose, too ready to toss away convention.

I think by July or August, 2021, we'll see much the same thing occurring.  The Millennials and Gen Z feel, rightly or wrongly, frustrated by difficulty finding new jobs even in the relatively booming economy in the late Obama and early Trump administrations. Further, they and others have had opportunities denied to them by the COVID outbreak.  They (and frankly a lot of the rest of us) are anxious to get out, go out to eat, to go to a ball game, get together with friends, travel and explore.

As vaccines demonstrate their effectiveness, and travel bans are lifted, we may see an explosion in the consumer market.  The most obvious places to watch for this are airline and hotel bookings.  What's even more interesting is how attitudes and behaviors about work and careers may change.  There were already rumblings that the younger generations have a very different attitude about work/life balance than the Boomers and Gen Y.  Many have experienced the gig economy and working from home and may want to work to live, rather than live to work.

Some simple predictions

If we play out these ideas, several scenarios are possible.

First, the travel and tourism industry could explode in the second half of 2021.  Destinations could be less important than the simple desire to go somewhere, anywhere, and experience something new.

The workforce participation rate, already declining due primarily to the fact that women are leaving the workforce to care for children, may decline some more as people decide to live life and put college or careers on hold for a year or two in reaction to the pandemic.

More people decide to start their own companies, in order to have more control over their lives, to work where and when they want to, rather than working for a large bureaucratic company.

Consumption follows a forked path, with some people deciding to live a much simpler life, and others deciding to live and spend as much as possible, since the future may not be promised to them.  Our consumption-driven economy may experience some fits and starts as it adjusts to a barbell-shaped economy.

Fewer people decide to attend four year colleges.  The cost and eventual benefit of a four year education simply does not align for many people, who will pursue other opportunities.  Traditional college and the value of the experience of residential colleges has been questioned for years, and COVID demonstrated that some people can get as much value from attending virtually.  College costs will have to stop rising for more people to believe there is value.

Governments may need to rethink how they raise funds.  In the US, we have income taxes, sales taxes, capital gains taxes but few consumption taxes.  When people are more open to new work and new experiences, income taxes may not be the best way to maximize tax policy and revenue.  Instead it may make sense to alter our tax policies to consider consumption taxes, to encourage people to think about what and how they consume, rather than what or how they make their income.

Getting ready for the deluge

I can't tell you exactly when this will happen, but I feel fairly confident it will happen.  I moonlight as an adjunct professor in a graduate program, and I can tell you that my students are ready for change.  They are frustrated that they cannot control their lives, cannot travel and cannot find good jobs, and when the situation changes I expect they will want to celebrate, at least for some period of time - say a year or two.  We may not see an instantaneous change in the economy or in markets, but I think it will happen, and we'll really experience it by the beginning of 2022.

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posted by Jeffrey Phillips at 7:17 AM 0 comments

Tuesday, November 10, 2020

Most good innovation is offensive

 If you are a football fan, the way I am, you know the old adage:  defense wins championships.  For years, decades even, defense held sway in the coaching ranks.  Everyone seemed to believe, and it was often proven out, that the teams with the best defense would win the championships and the Super Bowl.  There's another phase you'll often hear:  the best offensive is a good defense.

With this in mind, many teams and coaches built strong defenses and just OK offenses.  Over the last decade or so, however, rules were adjusted and new offenses emerged that proved that good offenses will often beat good defenses.  No longer is football a game of "three yards and a cloud of dust". Even in the college ranks we are seeing games where the aggregate score is often over 80 points in a game.  Needless to say, good offenses (and the rules changes that made them possible) now hold sway.

This represents a classic tension, between a proven, safe, conservative approach and the more aggressive, risk taking approach.  Strong defenses and safe, patient offenses are the conservative approach, winning with better field position and stopping the other team's offense.  Most coaches and teams have practiced a conservative brand of football. In the same fashion, many corporations play defense, and have very conservative management philosophies.

How executive management is like football coaching

While many coaches in the NFL are happy to manage the game, control the other team's offense and work their way patiently down the field, winning with small margins and field position, the same can be said about many executive teams in corporations.  The game is actually easier to play in large firms, because the bar for "winning" is set by the company through a whisper campaign about revenue and profits.  Then, the company merely needs to meet the goals it has set for itself.  You'll rarely see a company miss its numbers to the good or to the bad to any great extent.  If a company is going to exceed its numbers, it will hold some of that revenue back for the next quarter, just in case.  A company that cannot meet its own whisper numbers over several quarters (outside of an epidemic like COVID) will soon have a new management team.

With this in mind, it pays to play it conservative and safe, building on existing foundations and rarely straying from safe models and channels.  In other words, managing like a defensive minded coach in football.  So you can see why most innovation is incremental, building on existing products and channels, rather than disruptive or transformative, because that innovation becomes offensive and risky.

Why innovation is offensive

Innovation seeks new opportunities, to address emerging needs, customer and markets.  It is inherently aggressive, risky and growth oriented.  Rather than building on existing foundations and channels, it seeks to create new opportunities and new ways to engage with customers.  Therefore, it is offensive-minded, and runs head-long into a defensive minded mentality in many corporations.

Which is why I say innovation is often offensive (in multiple senses of the word).  It is offensive rather than defensive minded, meant to win new markets and opportunities rather than protecting and defending existing turf.  It is offensive to those who prefer a more defensive mindset, because it introduces risk and uncertainty.

Why the NFL changed

The NFL looked around about a decade ago and realized it was losing viewers to other faster paced, higher scoring sports like basketball.  Defensive games where the teams push each other around in the middle of the field may be tactically interesting, but fans want scoring.  New players and new rules have created the opportunity for far more scoring.  In the NFL, becoming more offensive minded was a reaction to the marketplace.

In corporations, there is a strong preference for managing and controlling, playing it safe, so a strong bias toward defensive-minded thinking.  While the market does reward innovators - those who are more offensive minded - the risk to reward ratio is not large enough for many firms and executives to shift their thinking.  Most true innovators in the corporate world come from the two ends of the success spectrum:  they are either far ahead of competitors and can afford the risk, or behind competitors and risky actions are all that's left.

Why companies remain defensive minded

And the key point in that last paragraph is "shift their thinking".  An NFL team needs only a new coach or owner and a few new players to shift the emphasis from defense to offense.  A corporation needs a shock to its systems, a top down philosophy change that changes not only management and compensation but also the inherent culture.

And if culture is a determinant for innovation, then it should be relatively easy to see which firms can innovate or have the capability to make shifts to more offensive minded thinking, and which will remain defensive minded until forced to change.

Further, being defensive minded is easier and more straightforward than being offensive minded.  In a defensive stance, you must defend what you already have, protecting familiar customers, markets and channels.  You compete on ground that you know.  In an offensive action, you compete on new ground, with new competitors and for new customers that will be unfamiliar to you.

Lastly, inertia makes it easier to compete over the same ground and for the same customers rather than reaching new markets and customers.  At some point in every company's life, the legacy of past experience and the amount of inertia that builds up makes it difficult to do new things.

Innovation can be offensive

For these reasons and many more, I think good innovation is often offensive.  Disruptive and Transformative innovation seeks to solve unmet needs or address customers who aren't happy with existing products and services, or who aren't served at all.  That means going beyond merely protecting the status quo.  It means going on the offensive.

And, since innovation introduces risk and uncertainty, the mere action can be a bit offensive to those who prefer safer bets and less risk.

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posted by Jeffrey Phillips at 10:19 AM 0 comments

Wednesday, November 04, 2020

I don't want to live in a Ready Player One world

 I'm working with a startup, focused on the future of nutrition.  This is not my first startup, or as we used to say in Texas, my first rodeo, and I doubt it will be my last.  I've had the good fortune to work in several startups that had different trajectories.  One, a consulting firm, grew rapidly but never went public.  Another software firm I worked with got just big enough to get acquired by a larger company, and yet another software company received funding from Softbank but failed to get another round just after 9/11.

I have a small book about these experiences that one day I'll get organized and published.  But what was relatively common about these experiences is that the ideas were relatively scalable.  The software ideas are of course almost infinitely scalable, while consulting is somewhat scalable.  In the past, when selling time by the hour was popular, consulting firms could not get enough people to join.  Now, of course, consulting is shifting its business model, looking for revenue streams outside of the billable hour because the model is no longer deemed scalable.  But all of these ideas seem scalable when you consider what it takes to scale a physical idea.

Tangible versus intangible assets

Software is scalable because I can license it or provide it as a service to as many people as I can find that need it.  With new cloud services, I'm no longer constrained by IT or to some degree even by human assets.  Eventually, software will provision itself, and even sell itself, so two of the biggest issues for scalability will be reduced.  With AI, it's possible that even much of the support necessary for software will be conducted by machines rather than people.  Think the person on the other end of your chat sequence is friendly?  Dollars to donuts it's a chatbot.

Intangible assets and ideas are scalable because they don't require a lot of work to sell, to provision, to implement or to support.  A fully automated, self-provisioning and self-service software application hosted on servers in the cloud is perhaps the best example, but there are more.  Tangible assets and ideas, on the other hand, can lack scalability, and increasingly I think big, physical ideas will become increasingly more difficult to imagine, fund or implement.

Impact on innovation

This idea of the significant difference between tangible and intangible ideas and the challenge of innovation is deeply concerning. What it means - and what we are seeing - is an increasing focus on innovation in intangible ideas, and less and less innovation in tangible ideas, assets and products.

While this is great for industries like gaming, financial services and software, it becomes a big issue when people need tangible products and services.  As companies look for a quick way to gain new inexpensive revenue, innovating around intangible products and services promises less investment and faster returns than innovation around physical products.

So, what we are increasingly left with is better and better intangible offerings and less choice and less value in the physical products we acquire.  Have you noticed how poorly designed and manufactured many products are?  Why invest in engineering, design, manufacturing and quality parts when the products are break even at best?  IBM didn't decide to split into two businesses for any other reason than the hardware side is rapidly becoming a commodity, but the software and cloud side of the business (intangibles) could have a bright future.

Tangible innovation is difficult

It's not just that intangible innovation is easier to do, it is also easier to realize.  Intangible ideas are usually software based, and while good developers are at a premium, software is still relatively easy to build.  Contrast that with the challenges of building say, a new car or a new medical device, where safety concerns, manufacturing, engineering and many other constraints and requirements come into play.  Plus, if the tangible products must fit within an existing infrastructure and work within accepted norms then the range and scope of innovation is narrowed and innovation becomes even more difficult to do well, and is easily copied.

And, even after you have a tangible idea, the ideas have to work their way into product development streams where they face competition from limited resources and other existing products.  It's often easier to re-use existing systems or components and sacrifice some of the differentiation for lower costs and speed to market.  And, once in the market, you still have to sell these products to consumers in a more traditional sales cycle.  There aren't too many tangible products that are available for free when you watch the advertising.

But not everything can be software

In the end, though, some level and amount of tangible innovation is required.  We can't (at least not yet) wear or eat software.  We can't transport ourselves using bits and bytes.  No matter how good Microsoft and Amazon are at cloud services, we can't all live in data houses.

This means that we innovators need to start creating programs and pathways that make tangible innovation easier, more practical and more affordable.  There are plenty of innovation opportunities in the tangible world, and none of us want to spend the rest of our lives cutting the costs of existing tangible products (and getting less and less value from them) while optimizing and innovating the online experience alone.  

If we keep going at the pace we are moving, we'll end up a little like the people in Ready Player One, who live in hovels but spend all their time jacked into video games. 

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posted by Jeffrey Phillips at 3:02 PM 0 comments

Thursday, October 29, 2020

Reversing your thinking

 I was speaking with a good friend whose vacation home was threatened by wildfires out west.  We spoke about issues like climate change, and controlled burns and other issues that lead to more fires, and more destructive fires.

His parting shot to me was - you are an innovator.  What can innovation do to change issues like climate change that lead to these destructive fires? I told him that there are many types of innovation - product, service, business model, as well as innovations that impact society and politics.  The innovation I am familiar with, and can happen in a reasonable time frame, is service and product innovation.  What he is asking for is societal and political innovation - where we all agree to change our collective behaviors to create a long term benefit.  These are more difficult innovations and either 1) evolve over time as perceptions or generations change or 2) change immediately due to a "burning platform".  Lasting political change occurred during and after the Great Depression and Second World War, in a way that hasn't repeated itself (yet).

As a side note, let me first say that my heart goes out to anyone who has lost property, homes or lives in fires in California, Colorado, Arizona, New Mexico or any other state.  We've seen a rash of fires and I have to believe they will only accelerate over time.

What I encouraged him to think about instead is reversing the problem.  Rather than thinking about how to keep forests from burning, which threaten the neighborhoods and houses where people live, perhaps we should spend a lot more time thinking about what happens when these forests burn.  In other words, stop trying to curtail fires where fires are likely, and start thinking about fire resistant yards, fire resistant structures and so on.  Why don't we innovative with the mindset of success when it burns, rather than trying to prevent something that is only likely to occur more often, and by trying to prevent it makes matters worse the next time?

Why reversing this problem may make more sense

We innovators are always looking for interesting problems - wicked problems - to solve.  However, there are some problems that are so intricate, that require so much agreement from so many different participants or require systemic or organizational change that these problems are difficult to solve and take a long time to solve.  Fires out west is a good example.  

First, we've started living on land that is susceptible to burning, yet we don't allow it to burn.  Second, dry timber from old trees and other brush piles up, creating a tinder box in some areas.  Third, the overlapping governmental bodies (local, state and federal) have different rules about what can be burned or cleared.  Fourth, while people understand that the dead undergrowth is dangerous, they also don't like a local burn to reduce the load.  There are a lot of competing interests, which stymies quick action.

So we have societal pressure, environmental pressure and government regulations that reduce controlled burns - and we haven't even started on the issue of a drying west or climate change.  These are complex issues that will take significant societal and political will to solve.

Accepting that burns will happen

If we then accept that a lot of land is likely to burn more frequently, then our key question (from an innovation point of view) should be:  How might we improve the survivability of structures, neighborhoods and property when the forest burns?

For example, we might insist that all remote property has at least two methods of egress.  The city of Raleigh, where I live, has mandated that builders cannot build more neighborhoods with cut-de-sacs because they are difficult to get to for fire and rescue and have only one exit.  If people are threatened, they should have more than one way to exit.

We might also start to consider alternative building components like brick or concrete, which are less likely to be destroyed in a fire, or perhaps entirely new building materials can be introduced.  Further, we can innovate completely new building materials.  For example, a house built primarily out of earth would not burn.  Maybe we need to use older ingredients with modern engineering. 

This exercise requires far more brainpower than one person on one blog.  It requires rethinking how we build, where we build, and what materials we use to build.  A really robust brainstorm would consider the question:  How might we build to survive massive fires when they occur, rather than asking how we can keep them from occurring or stopping them before they threaten lives or property.

Operating from "givens"

If we start with the assumptions that factors like drought and climate change will continue, and that people want and need to live on land that is susceptible to burning (a significant portion of the west and parts of the prairie), and that these conditions are only magnified as drought occurs or population grows, or more people use the forests, then we can begin to see that one of the best ways to think about this problem is to expect fires and then ask - what's the best we can do to survive a fire and sustain the least amount of ecological and property damage possible once the fire burned?

It's entirely reasonable to continue to seek societal and political alternatives to climate change, a drying climate and a lack of interest in controlled burns.  But if we wait for these options to emerge, we may see more fires destroying the landscape and dwellings.  What could be more useful and create more practical solutions more quickly is to reverse the thinking and accept that fires are a natural part of life, and may only increase.  Then we can ask, how might we build to survive a fire.

Just an example

While the illustration above about building fire resistant or even homes that withstand fires is an example of reversing thinking, this approach is viable in so many other innovation needs. Too often, we frame problems around what we want to prevent, rather than what we want to protect, or what we want to avoid, rather than what we wish to achieve.  

Sometimes turning the problem around - reversing your thinking - can lead to different outcomes or at least new perspectives.



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posted by Jeffrey Phillips at 10:56 AM 0 comments

Wednesday, October 21, 2020

What if this is the "new normal"?

 In a way, I'm kind of glad that fewer people are talking about the idea of things "getting back to normal".  The part of me that craves consistency and safety wants to go back to the way things were - more predictable, less fraught with problems and challenges like COVID.  The innovator and entrepreneur in me craves change, but in a good way - change that I create, change that makes things better.  Sooner or later we will all realize that 1) change is going to happen, 2) we can't necessarily stop it or direct it and 3) we can get better at anticipating it and making it our own.

If people stop talking about getting back to normal, then they've either resigned themselves to living in this choppy, chaotic, uncontrolled world of COVID, or they realize that a new normal is unfolding.  I'm not sure which is the right answer.  I'm concerned that rather than anticipate and start preparing to ride the new wave of change that is about to unfold, many people and businesses are hunkering down, waiting for the storm to pass, so the "new normal", whatever that is, will reveal itself and they can then respond to the new conditions.

Here's a little insight about that strategy:  it's not going to work well for you.  Waiting for the new normal to emerge, hoping that things "get back on track" after COVID ends is not a strategy.  After all, as we are constantly reminded, hope is not a strategy.  COVID is a large change agent, but in the grand scheme of things it is simply one of a number of significant change agents that is impacting how we work and how we live.

Let's consider a few of the other change agents that COVID is exacerbating or magnifying:

  • Growing inequality in jobs and income on a global basis.
  • Shift from labor to capital to knowledge
  • Rapidly changing business models (software as a service as harbinger for more "as a service" options)
  • An older generation from the Second World War and the Boomers leaving the scene as Millennials and Gen Xers take over
  • Europe becomes less relevant as China emerges
  • Oil becomes less important as other forms of energy emerge
  • Political platforms move toward populism and nationalism; international agreements and accords seem less valuable

You might argue with any of these points.  For example, you might say that political programs don't affect me or my business.  If you believe that, check with the farmers who lost soybean sales to China.

In an ever consolidating and interconnected world, everything - politics, demographics, technology, societal composition and tastes - everything has an impact.  If the Trump administration can force a management change at Tik Tok, then everything is subject to change.

If all of these significant forces are changing, then the new normal is not a consistent state of being, but a consistent state of change.  We need to start building companies, and business models, and products that are capable of withstanding - no that thrive - in more consistent change.  Any business models that are based on consistent operating conditions are going to fail.  When IBM - IBM of all companies - divides itself up to further lessen its dependence on hardware (remember the M in IBM stands for "machines") then everything is subject to change.

This is an existing firm's nightmare and every entrepreneur and innovator's dream.  Smaller, agile firms should be able to win more in the coming days, while larger, slower, more monolithic firms are going to struggle.  What to do?

  1. Start rethinking your business model.  Forget your products or services for a moment and consider your business model.  What about your business model creates blind spots or rigidity?  Change it now.  What about your business model provides flexibility and agility?  Spend more time and effort on these aspects.
  2. Once you've rethought you business model, consider your product and service offerings.  Perhaps it's time to switch from selling tangible products to offering access to products.  Perhaps its time to consider new revenue models, or to eliminate products or services that are profitable today but will be boat anchors in a year.
  3. Rethink your people and structure.  The most difficult change won't be in your products and services or your business model - those are relatively fungible.  The most difficult change will be in your org structure and the people who are making decisions.  In this shift, a lot of people will need to be reallocated to new opportunities, and that will mean a lot of resistance as people fear losing their jobs or hard-won positions.  Spend a lot of time with your people, helping them see the need for change (they see it - they want to know you see it and have a plan) and why a new structure and role is beneficial for both parties.  Silence from the top is deadly now.
There's a lot more to do, but these are some key ideas about getting ready for the new normal, which is really just getting ready to operate in much more choppy conditions.
 
 
 
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posted by Jeffrey Phillips at 12:30 PM 0 comments

Tuesday, August 25, 2020

It's the end of the world as we know it, and I feel fine

 For those of you who were listening to radio and, yes, buying compact discs back in the 1990s, you may recognize the headline of this post as the title to an R.E.M song.  It also depicts what innovators and entrepreneurs should be thinking in the middle of this COVID epidemic.

Don't get me wrong - we cannot celebrate as thousands of people are dying and perhaps millions are contracting the diseases associated with the Corona virus.  But at the same time we should recognize that virtually every industry will be changed, some for a short time and some forever.  And in those impacts and changes live innovation opportunities.  For some businesses and organizations, this could quite literally be the end of the world.  But, as Schumpeter said, there is little new creation without requisite destruction.  Just in this case what is getting destroyed is outdated business models.

It's the end of...

Well, I could make a list, but lets look at a few examples.

Residential College

COVID is drawing attention to the high cost of residential college.  If you have to pay the same price to live at home and watch your professors (or in many cases adjuncts) teach classes as you would if you were on campus and in person, then what's campus life for?  And, more importantly, since some online universities like University of Phoenix and Southern New Hampshire University, and, yes, Liberty University, know how to educate people online, isn't a really credible four year online degree that costs less than say $20,000 a reality?  At a time when even state universities are seeing rising costs and questionable returns on residential campus programs, COVID has exposed the fact that there are a lot of overhead costs and inflation in the system that aren't adding value.  

Physical retail

Already under great strain before COVID, most retailers are facing a really difficult time because no one wants to go into stores, everyone can compare products and prices online and can often get a better price online.  Plus, free shipping.  The future of retailing will focus on very narrow niches, luxury items and goods that require a lot of in-person choice.  The larger and more diverse the retailer - with perhaps the exception of Wal-Mart or Target - will come under tremendous pressure.  Thanks to Amazon, you may be a bit late to this opportunity, but contrary to what many believe, Amazon still controls less than 5% of retail sales.  There is an opportunity in online retailing still.

Fashion

Where will fashion go, when we can all work from home in our pajamas?  Of course we won't all stay at home forever, but as many fashion trends go, I think that many people will question why they spend so much on clothes, whether they go to work or stay home.  Just as fashion trends evolved - for example, men wore hats quite frequently in the 30s, 40s and 50s, only to move to a more hatless approach in the 60s and 70s - we will see new fashion trends and opportunities emerge.  One I am waiting for is the integration of the face mask into our fashion.  Just as the cravat and necktie have evolved over time, I think we'll see some morphing of the mask into a component or regular aspect of a garment.  Not to mention that gloves for both men and women may come back into fashion, for health reasons if not for appearance.

Fancy dining rooms and large entrance ways

If we are going to be spending more time at home, we will be spending more time on the house and more specifically the outfitting of the home.  More homes now need more office like equipment, more places of solitude for people packed in at home, and less formality and more usability.  We'll do more cooking at home, we'll consume even more content at home, and we may even bring back an idea from the 1960s and 70s - the wet bar - so we can mix our own drinks at home and pretend we are visiting the location establishment.  We already know that alcohol consumption is up during the pandemic, so many people may be developing man caves or locations in the house more conducive to making, mixing and drinking all that alcohol.

There's a huge opportunity for ...

Disease prevention

I saw a photo of students walking on campus at UNC in a medieval getup, dressed like plague doctors with long robes and a mask that included a beak.  While we may not go this far, I think there will be many products and services that address how to prevent the transmission of the disease. One idea in particular is a box at home, just outside the front door, to receive packages.  You may be thinking to prevent theft - which it could do, but I was thinking of a box equipped with UV light or some other means of disinfecting the box before it comes in the house, or wrapping shipping boxes in some sterile wrap or fabric to neutralize anything on the surface.

I think there may be a demand for products and services that help us transition from "outside" the house - whether that's people or equipment or purchases - to inside the house, much like astronauts returning to Earth.  

There will be an opportunity for more interactions to go "touchless" - for example, why can't I speak to my ATM rather than have to touch all the buttons that thousands of other people have touched?  Our aversion to touching surfaces in restaurants, ATMs, restrooms and so on will be far more profound than it is today, and there will be a lot of opportunities to address this.  Already we have touchless faucets and towel dispensers in restrooms.  Can touchless ATMs and gas pumps be far behind?

Medical services and information delivered beyond the doctor

In just a few years, you'll spend far more time at the pharmacy than you will at the doctor's office.  First, that's because going to a doctor is difficult and expensive, and increasingly many tests and simple procedures (flu shots) are available in the pharmacy.  As more and more tests become commoditized, WalGreens, CVS and others will be your first stop in the healthcare system.  And, since they have all the food, vitamins and health supplies right there in the store, you will often save a trip.  Insurance companies will encourage this because the services will be delivered in a low cost way, drug stores and pharmacies will see this as a loss leader to get you in to offer you products at higher margins.

In the midst of uncertainty is opportunity

I've just touched on a few ideas, but with the right incentive and good problem spotting, I think we'll see a wealth of new product, service and business model ideas emerging in the fall.  Some will solve the problems that are current, and some will identify trends and solve for shifts in consumer behavior and sentiment.  For example, when I received a "phone washer" as a gift a few years ago, I chuckled.  A nice gimmick but I rarely used it.  Since COVID, my wife and I use it every day.

What's even more interesting is that there is a fair amount of money out there looking to invest in good ideas.  The time is right for innovation, and innovators who can spot ideas and bring good solutions to market will have a good opportunity.  Strange as it may seem, this is a great time for innovation, however, I think only entrepreneurs and smaller organizations will be able to take advantage of the window.  Larger firms are simply trying to understand what's happening and cut costs to stay in business.

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posted by Jeffrey Phillips at 1:55 PM 0 comments

Wednesday, August 19, 2020

Innovation is a harsh mistress

I'm a big fan of science fiction.  There's really nothing more interesting to me than to think about how the future will unfold, and science fiction is a great way to project what may happen with society and technology in many different future settings.  I guess this is also why I always advocate for trend spotting and scenario planning.  If we can begin to understand how the future will unfold, then we can spot new needs and create new products before markets and consumers are even aware - skating to the place where the puck will be, as Gretzky would say.

All of which is a long introduction to my post for today.  One of my favorite authors is Robert Heinlein, who wrote a number of good Sci-Fi books, each of which had technical but more importantly societal considerations.  One of my favorites by Heinlein is The Moon is a Harsh Mistress, from which I've obviously borrowed much of my post title.  The book revolves around the idea that the Moon was populated as a prison colony, and over time an entire society grows up to the point where the Moon is somewhat autonomous and gaining power, and Earth isn't happy with the outcome, so Earth flexes its muscles and the Moon fights back the only way it can - by launching rocks into space that fall on the Earth.  Read the book - it's also one of the first places where "There ain't no such thing as a free lunch" or TANSTAAFL, was popularized.

What we learn about the inhabitants of the Moon is just how treacherous their lives are.  The Moon is a harsh mistress because it is an exceptionally difficult place to live.  One small mistake can kill you, and hundreds of other people.  Air is at a premium, water initially imported and then mined as ice.  Atmospheric pressure is maintained by pressure walls.  Unlike on Earth, where a simple mistake may cause a small injury, on the Moon a pierced suit or a gap in a pressure wall could cause catastrophic death.

OK, interesting, but what's this got to do with innovation?

Innovation work is a lot like living on the moon

Ok, so we aren't astronauts.  We don't require pressurized suits to do innovation work, but in many ways innovation faces the same amount of risk and uncertainty that life on the moon creates.  Let me explain some of the similarities.

1. Getting into orbit.  On Earth we live in a gravity well.  The physics are clear - you either give the rocket enough energy to clear the well and get into orbit, or it crashes.  There are no other options.  Anything less than enough energy to get into orbit is fatal.  The same is true when starting an innovation project.  There is a specific amount of energy and support necessary from senior management and the innovation team.  Anything less than that amount of support and energy will end in an innovation failure.

2.  Living in space or on the Moon.  While we take for granted our access to free air, available water, and an electromagnetic barrier that keeps harmful rays from hitting the Earth, none of those factors exists in space, or on the Moon.  The only way to sustain life on the Moon is to carry much of your provisions with you, and burrow under the surface to avoid harmful rays and terrible cold.  In an innovation project, this is also true.  You are undertaking an exercise into the corporate unknown, where decision making, policies, corporate culture and investments are scarce.  You'll need to pack it all in with you.  What's more, on the Moon and in an innovation activity, even a small, innocuous problem can kill.

3.  There's no quick fix.  On the Moon, if you run out of a key resource, there's no quick fix.  It takes time and costs money to send more supplies.  Think of the astronauts on Apollo 13 who needed to make an air filter from random parts just to survive.  And they weren't short of oxygen - just had too much carbon dioxide.  The same is true with innovation.  Due to the way we plan and staff innovation work, you'll get less people and funds than you need, and money and additional resources can be hard to acquire.  If something goes wrong with corporate innovation, the quick fix is to kill the project or reduce the scope.

4.  It's difficult to "return".  Astronauts who leave the Earth routinely describe the re-entry to the atmosphere as one of the most harrowing events.  A miss of just a few tenths of a degree means that the capsule will burn up on re-entry or bounce off of the Earth's atmosphere and continue on into space.  New ideas have the same challenge.  Even really good new ideas must run a gauntlet of timing, project priorities, favorite products, successful existing products and other issues simply to get accepted, much less implemented.  New ideas have a difficult time entering the existing product development process.

For those of you who have experience in corporate innovation, I think most of you will nod at my description of innovation work and its similarity to a trip to the Moon and back.  Anything other than a simple incremental change to existing products presents challenges and difficulties that make innovation difficult - but not unrewarding.

What's required for success is a strong Mission Control - a group of supporters who are convinced in the success of the mission, and who provide the right resources, governance and support necessary.  What's also required is a group of innovators who are dynamic and flexible, who can adjust to swift changes and shortages, who can adapt to circumstances while keeping the goals in mind.

I think innovation can be a harsh mistress, one we approach with care and planning, with the full support of a management team that understands the costs and risks.
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posted by Jeffrey Phillips at 6:06 AM 0 comments