Friday, July 27, 2018

Societal and demographic signals are more influential than technology trends

As innovators, we are constantly entranced by the idea of signals in the marketplace.  Signals that indicate new opportunities, shifts in consumer demand, emerging technologies.  But so often it's easy to get captivated by the new technologies.  This is happening right now, as concepts like "digital transformation", artificial intelligence and blockchain are all top of mind.

The problem?  No one really knows what the long term impact or implications of any of these emerging technological solutions is or will be.  I have a hard time getting a good, clear definition of what 'digital transformation' is.  It seems to differ based on the potential adopter and the company making the offer.  Right now, firms are entranced by what emerging technologies like blockchain or artificial intelligence could mean for their businesses, and are ignoring sweeping changes that may be harder to quantify.  But these other changes I think can be shown to have greater impact.

The simple drinking straw

For years, billions of us have accepted a plastic drinking straw with our happy meals, at restaurants, at the convenience stores where we buy our oversized soft drinks.  Drinking straws are ubiquitous - they are provided at every fast food restaurant, most dining establishments and plenty of convenience stores.  Not to mention all the straws sold at grocery stores.  For decades we've used them and tossed them away.  Yet in a virtual blink of an eye, they may disappear.  Why?

Societal pressure.  People are becoming more conscious of small items like straws that are produced and thrown away in such volume.  New laws are  being introduced to eliminate or outlaw straws, based primarily on the health of sea life and the amount of trash that items like straws produce.  Never mind that straws are about one tenth of one percent of the plastic trash we generate.  Public opinion is shifting against plastic straws, and when public opinion shifts, politicians often act right behind the shift in public opinion.  When Starbucks and other national chains start eliminating straws, laws against straws can't be far behind.

We can argue about the value of the "straw ban" and its effect on trash and marine life, but there's a larger point here.  An entire industry is on the verge of collapse, not based on new technology, not because of blockchain or AI, but because a vocal minority of people moved against straws. 

Paying attention to societal and demographic signals

Straw manufacturers are in a world of hurt, and the damage has been inflicted rather rapidly.  Societal pressures and demographic signals are probably the most powerful signals about how the future will unfold, yet we spend less time listening and understanding these trends and signals than we should.

The straw ban is a good example - much of the data behind the ban is suspect.  Many media outlets reported the statistic that 500 million straws are used and thrown away each day, but further investigation revealed those numbers were based on a guesstimate by a child.  No matter.  Once the public gets behind a cause or an idea, and the cause takes root, consumer behavior and attitudes can change rapidly.  If you aren't paying attention to these signals, or worse are downplaying them or ignoring them, your entire value chain can collapse.  Retailers react to pressure to remove straws, and suddenly your best customers are actually your opponents.

Why don't large corporations pay more attention to societal and demographic trends and signals?  First, the data is qualitative and can be difficult to aggregate and interpret.  Most corporations like quantitative data.  Second, it can be movement or emotion based, which can have negative connotations.  Many corporations don't want to be leading political or legislative change, they'd rather wait to see what happens in the public sphere and then respond.  Third, some changes are challenges. If straws go away, how do we replace the task that they filled?  Do people bring their own re-usable straws?  Do we create disposable cups with a funnel or some other mechanism?  Finally, corporations often ignore or discount societal or demographic signals because they can conflict with the investments and emphasis on existing products.  No company and certainly no manager tasked with meeting quarterly revenue goals wants to think that their markets and consumers are likely to rapidly shift away from products they've used for decades.  It's easier to discount these signals than to incorporate them and consider the implications.

Looking further

But let's go further and make a prediction:  the humble straw is simply, forgive the pun, the first straw.  As millennials become a larger buying group, and the generations after them as well, their mores and purposes will come to the fore.  It won't just be straws that will be an issue, but we'll see acceleration of long standing trends toward reuse and recycling.  Takeout boxes, plastic forks, spoons and knives, foam cups, basically anything you can take away from McDonalds or 7-11 will become a focus for reduction or elimination.   You read it here first, but you already knew this - all that stuff you get in your Happy meal or buy in your snack run is going to go through dramatic change or it will be eliminated in the next few years.  Society will demand it, and technology will have to figure out how to make it happen.  This is why societal and demographic trends almost always trump technology trends.
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posted by Jeffrey Phillips at 7:44 AM 0 comments

Tuesday, July 10, 2018

You need a chief disruption officer, not a chief innovation officer

In older times, when kings ruled countries with little input from their subjects, it was easy for the king to exhibit some hubris.  After all, the king's family and retinue encouraged the idea of divine coronation - the sense that the king had his power from a divine source and that everything under his domain should pay homage to him.  Given this power, it wasn't hard for kings to become a bit deaf to other ideas or suggestions, or the idea that he could be fallible.  To compensate for this, some kings employed jesters, who were people who could actively question the king's decisions.  Jesters of course are an outgrowth of slaves who rode with generals returning from major conquests in ancient Rome.  The slaves were employed to constantly remind the general that he wasn't a god.

I bring up this history lesson to illustrate a key point.  Today's executives are very powerful, but are beholden to markets that demand exceptional financial precision.  Anything that deviates from delivery on promised financial results can be easily called into question.  Since everything in a business is focused on core products and services, delivering the results on a quarterly basis, someone, it seems, needs to act as a 'jester', constantly asking to expand thinking beyond the next quarter.  The fact of the matter is, cultural attitudes, efficient processes, reward systems and other factors make the job of a "chief innovation officer" difficult, often turning the role into a chief incremental officer.  What major corporations need is a senior executive who's only job is to focus on the future, on disruption, on what's emerging and how the company can win.  What I'd call a chief disruption officer.


OK, so far I've given you the history of the jester and related the importance and power that they had - the ability to question a king's decision - to a new role.  That new role is the Chief Disruption Officer.  When everyone in the company is focused on maintaining and defending the status quo, someone or some team needs to be looking over the horizon, seeing what's next and planning for emerging opportunities and emerging threats.  There is simply too much change underway to ignore this or to pay lip service to understanding what may disrupt your business, or what you can disrupt.

People will agree that insight into emerging opportunities and potential disruptions is important.  However, they will try to distribute the activity across a number of people or teams, and as the role is disseminated this way it loses importance.  Further, the role becomes an observer role rather than a proactive role, requiring the company to react to factors the observer identifies rather than move proactively into the marketplace.  To win the future, to be a good innovator, you need a fully functional CDO.

Supporting features

To make the CDO really work, you need more than a corporate figurehead.  The CDO needs a mandate from the CEO to win the future.  Beyond this mandate the CDO must align to corporate strategy and be accountable for specific revenue goals (ie 20% of revenue from newly released products or services).  This means that beyond a mandate and specific goals and measurements, the CDO needs funds that will allow them to obtain internal staff for key roles and/or partner with external agencies when internal staff are too busy doing incremental stuff.  Further, they need the ability to realize good ideas as new products and services, either within the internal product development process or developed externally or acquired.

If at lot of this sounds like what we expected a Chief Innovation Officer to do, you are right, but too often the CIOs are co-opted by existing models and practices and become proficient at building innovation methods and processes that simply augment existing models.  They become, in effect, the Chief Incremental Officer.  With all the pressure to sustain existing models and methods, we need a jester who has real power to create real difference in the organization.

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posted by Jeffrey Phillips at 12:25 PM 0 comments