What in hell do stories have to do with innovation?

Regular readers may be tiring of the constant barrage of story-related posts, or at minimum be trying to figure out how they relate to the title of this blog. Here are some words that I hope tie it together.

More and more products are launched and evolve in an iterative fashion. Version 1 does this, version 2 does that, and version 3 finally hits the mark and becomes the standard (exhibit A: Windows). Those iteration windows are becoming tighter, so good information as a basis of planning product changes is invaluable. Google in particular has turned this approach into an art form.

There are more and more ways to get feedback directly from users. Forums, call centers, social networks, Twitter, etc., etc., allow users to communicate their likes and dislikes about a product.

Now, to storytelling. Most business applications of storytelling focus on communicating outward--developing a story that helps communicate the essence or benefits of your product or company. Steve Denning, in his recent book "The Secret Language of Leadership" calls these indirect stories--stories that inspire stories in the mind of the reader or listener. Indirect stories are necessarily incomplete--they are not meant to immerse the listener in an experience (like, say, Harry Potter does). They are meant to create empathy and consensus.

What I'm talking about (as are Shawn Callahan & Mark Schenck of Anecdote, Dave Snowden of Cognitive Edge and others) is inverting that model.

In addition to crafting stories and sending them out toward customers, staff, etc., what if we listen to the indirect stories coming from them? They are also necessarily incomplete--mere anecdotes--but if you gather a few dozen, a few hundred, or a few thousand, common themes and threads will become evident. To invert Denning's language, there's the possibility of inspiring stories in the mind of the company.

These stories might say things like:

• People find our product really hard to use.
• Feature X of our product is proving more valuable than we expected.
• A group of people are using our product in an interesting way that we didn't anticipate.

As a product manager, the above stories are very important to me. They help orient me toward things I should do to improve product packaging, add or delete features, alter its marketing message or improve its customer service or technical support. Also, the user stories are pre-hypothesis, meaning that they are free of bias that can come via hypothesis-based approaches such as surveys. They are not adulterated by groupthink, as can happen with focus groups. They are the voice of the customer.

None of the individual anecdotes may send clear messages about where innovation is working and where it isn't. But the accrual of them can do so.

Companies don't use this resource to improve innovation. They should.

And that's what I'm talking about.

(For a powerful example of the accrual of "indirect" stories to create a compelling, nuanced, overall story, please refer to this earlier post on Haruki Murakami's "Underground.")

Related Post:
Stories that people tell about products are invaluable

Tags:
complexity, narrative, product management, sensemaking, innovation, what in hell is, storytelling

What in hell is Service-Oriented Architecture?

A hint--it does not describe the new headquarters building for the International Red Cross. Rather, it is either the newest empty IT buzzword or the most important innovation in corporate computing since that Internet thing.

First, let's describe the problem. Companies still do most of their business functions in-house. To support those functions, they have over the years developed customized IT systems. Through growth and acquisition, these same companies have ended up with multiple instances of very similar processes supported by very different systems. This duplication is wasteful both in IT costs (maintaining redundant systems) and in operating costs (doing the same thing in different ways).

Employing an ERP system like SAP or Peoplesoft can address part of the problem--through brute force, a successful SAP implementation requires a company to adopt one way to process, say, employee expense reports. Yet that leaves lots of room for improvement. For the Fortune 1000, are there really 1000 uniquely valuable ways to process expense reports?

And that's where Service-Oriented Architecture (SOA) comes in. SOA specifies IT systems as loosely coupled sets of services. Processing an employee expense report is one such service. Different front-ends, say web vs. mobile, are different services. A system architect then would combine these services into applications--plugging the web front end on for a desktop expense-report application, plugging the mobile front end on for a mobile app.

This was some of the thinking behind object-oriented programming since the 1970's, but services are much larger than objects, they are completely self-contained, and the "orchestration" required to assemble them does not require programming. What makes this possible is the internet and programming tools like Java, SOAP, XML, etc. A chunk of code receives a request for services over the net, processes it, and returns results to the calling process.

A company, were it to organize itself around a service-oriented architecture, could easily select systems to implement a standard expense reporting process, or outsource the process. If a better system or outsourcing partner emerged, the company could adopt it easily. And so on across all its processes. The promise would be a company that executes commodity processes very efficiently, and that is able to truly differentiate its most value-adding processes.

But it's a daunting change. The article "The Next Revolution in Productivity," by Ric Merrifield, Jack Calhoun and Dennis Stevens, in the June Harvard Business Review addresses this question. It also provides a detailed overview of SOA and the implications of this model for companies.

Which are: the potential of SOA is almost limitless, yet implementing it will be very difficult. It might be more expensive than those terribly costly SAP implementations you read about in the paper. In fact, startups who adopt this type of methodology from the outset may be creating a long-term competitive advantage against the dinosaurs.

Further reading on SOA:
An SOA overview from xml.com
IBM resources on SOA
The same from Microsoft
A nice one-page diagram

Tags:
what in hell is, information technology, architecture, business processes

What in hell is retrospective coherence?

It's perfectly clear why the dot-com bust happened. A bunch of internet startups all chased the same customer base, sought eyeballs instead of revenue, and tried to get big fast. Telecoms operators, hardware companies and software vendors all got fat on the investments of these startups. Then, when it became clear revenue wasn't forthcoming, the whole house of cards collapsed.

The problem is, that wasn't at all clear in March 2000, the top of the bubble. From my recollection, everyone owned stocks and checked Yahoo Finance throughout the day, calculating their (paper) net worth in real time. (Remember the book "Dow 36,000"? It's now available for $0.93 on Amazon.)

Our utter clarity on the events of the dot-com bust is an example of retrospective coherence. I first saw this term in the writings of Dave Snowden of Cognitive Edge. Retrospective coherence means that, in hindsight, it's easy to explain why things happened in a complex environment. Yet it is impossible to predict them ahead of time. (The long-running Dartboard investment competition in the Wall Street Journal bears witness to this phenomenon.)

Another example from the US sporting world is the recent Super Bowl. From all the post-game coverage, it's perfectly sensible why the New York Giants beat the Patriots. Their defensive line was superior, their coaching was better, the players were tougher.

But--before the game, nearly everyone had picked the Patriots. And a couple of key plays affected the outcome--if Manning had gotten sacked, or Tyree not made the catch on the same play, the papers would have written a very different story.

Getting seduced by RC causes us to create foolproof strategies and riskless plans. Once these are exposed to the complexities of the business world, their usefulness quickly deteriorates. The real damage occurs when we hang onto them too long.

When we recognize this trap, we can approach problems in a different way. Rather than trying to find the one correct path to our goal, we can perhaps decide on the first few steps, take them, assess where we are and whether to change direction, and progress in that manner. Or we can attempt some experiments and see which path is working best for our objectives (see what Dave says on "safe-fail" probes).

But always we must be aware that the playing field is constantly changing, that today's "no lose" investment strategy is tomorrow's $0.93 Amazon special, and that, sometimes, when the championship is on the line, the Giants will beat the Patriots.

(Photo: Sports Illustrated's cover of the Giants' Super Bowl win)

what in hell is, strategic planning, complexity

What in hell is the Electron Economy?

I recently discovered an epic series of posts from Michael Hoexter, author of the Green Thoughts blog, on the Electron Economy. What is that? It's a point of view on sustainable energy use that focuses on relying more on electricity as opposed to relying on point of use fuels (petroleum, biodiesel, ethanol, hydrogen, etc.), emphasizing "the desirability of building out the electricity-based energy system as a means of harnessing most renewable and carbon-neutral forms of energy."

Here's Hoexter's thesis in brief:

Electricity generation, efficient forms of electric storage (electrochemical batteries and beyond), and electric motors, powered by renewable energy flows, should become even more central in our energy economy, much more important in the short and intermediate term than more celebrated biofuels or hydrogen fuel cells.

Hoexter has written an exhaustive document covering the past, present and potential future of electric power and its uses, makes a persuasive case, including statistics, that electricity is the nearest, best option for sustainable power--including for heating and transportation, two areas of limited electricity use today. (He points out that electric motors convert 85-90% of received energy into kinetic energy, while gasoline engines convert just 15-25%.) Add to that a pervasive distribution network (which have yet to develop for new fuels), and electricity may be where we should focus our R&D efforts, rather than switchgrass.

Here are Hoexter's posts:

Part 1
Part 2
Part 3

And if you have more time, here is the original source of the "electron economy" concept--a paper by Dr. Ulf Bossel of the European Fuel Cell Forum.

On the same subject, "Science Friday" from National Public Radio several weeks ago presented an interesting segment on advanced fuel technology in automobiles (download an mp3 of the broadcast here). It included an advocate for plug-in hybrids (Sherry Boschert, the author of "Plug-In Hybrids: The Cars That Will Recharge America"), whose arguments were more compelling to me after reading Hoexter's introduction.

Hey Toyota, when's your plug-in hybrid going to be ready?

(Thanks to my friends at Futurelab for alerting me to Michael Hoextler's work.)

(Lead photo by clix via stock.xchng)

innovation, electricity, sustainability

What in hell is Most Significant Change?

Let's first pose a problem. You've put in place a new performance evaluation system and spent a year conducting reviews using it.

How's it working out for you?

Your program will have target objectives like improved employee satisfaction, perhaps, or increased personnel retention. But the first indicator is difficult to baseline and measure, and the second requires a long time to discern a change.

Complex initiatives...vague indicators of success...the hunger to know whether something costly and labor-intensive was worthwhile.

International aid programs face this problem every day, and from that domain has emerged a new method for monitoring these types of programs.

It's called Most Significant Change. (Here's the official guide, written by Rick Davies, the creator of the approach, and Jess Dart.) At its most basic, this deceptively simple approach asks field workers (or first-line managers in the business context) to elicit anecdotes from the people affected, focusing on what most significant change has occurred as the result of the initiative, and why they think that change occurred. These dozens or hundreds of stories are passed up the chain and winnowed down to the most significant, as determined by each management layer, until finally one story is selected.

It's not numbers, or graphs, or ROIs. It's a story, with an explanation, and behind it a collection of other significant stories. A story that describes a real experience, reviewed, defended, and selected by the people charged with the success of the program.

Why can this monitoring method work for programs like our performance evaluation system? I'll discuss that in another post.

communications, storytelling, measurement, innovation, narrative, strategy

What the hell is an MVNO?

This week I'll be blogging from the MVNO Strategies & Markets Conference in New York (registration information here if you're interested). The posts will be more narrowly-focused than normal. Therefore, to orient our non-telecom-professional readership, I'll need to provide some background.

MVNO stands for Mobile Virtual Network Operator. In the old analog days, that meant cellular reseller; i.e., a company that resold cellular service under its own name. Three major changes have occurred in the US and many other markets around the world that have enabled this old reseller market to reform into what we now call MVNO.

1. Digital cellular has replaced analog. With that transformation has come more open standards, such as GSM, CDMA and various advanced intelligent network (AIN) protocols. This has opened up wireless network technology to new suppliers and, important for the MVNO market, improved the ability for partners of the network operators.

2. Creation of multiple, nationwide carriers. Both modifiers are important. Multiple network operators (preferably three or more) create a competitive environment that incents carriers to resell excess capacity to MVNOs. Nationwide coverage allows MVNO to sell service most everywhere in a country with a single carrier agreement, an important simplification that improves the marketing leverage of an MVNO and also reduces cost.

3. Investment in wireless data infrastructure. Carriers throughout the world have spent tens of billions of dollars on 3G infrastructure. Gaining a return on that investment is important and again incents carriers to bring in MVNO partners.

The result has been an explosion of MVNOs around the world. Tesco, a grocer, has brought on millions of prepaid clients in the UK. Disney has created a specialized mobile family application that it is selling in the US. And PLDT from the Philippines provides service to hundreds of thousands of Filipino expatriates in Hong Kong and soon in Singapore.

Will MVNOs remain an important part of the wireless landscape? Or will the marginal ones fade away, and the strongest merely become subsidiaries of the ever-growing carriers? We'll have to stick around for a few years to know.

innovation, telecom, MVNO

What in hell is the fuzzy front end?

No, it's not a new way to customize Honda Civics. According to the Product Development and Management Association, the Fuzzy Front End is a model describing what happens in the earliest stages of new product creation.

So "front end" is taken care of. Now, why "fuzzy"? Because it's unpredictable, nonsequential, inconsistent and hard to measure. That being said, there's an increasing belief that this phase can be improved, and through such improvement great leaps can be made in increasing the returns from new products and services.

The article linked above describes the fuzzy front end and a way to formalize (to the extent something fuzzy can be formalized) the model to provide more consistency and predictability in companies' product creation efforts.

First, some important definitions from the article:

• Opportunity: A business or technology gap, that a company or individual realizes, that exists between the current situation and an envisioned future in order to capture competitive advantage, respond to a threat, solve a problem, or ameliorate a difficulty.

• Idea: The most embryonic form of a new product or service. It often consists of a high-level view of the solution envisioned for the problem identified by the opportunity.
  

• Concept: Has a well-defined form, including both a written and visual description, that includes its primary features and customer benefits combined with a broad understanding of the technology needed.

To be continued...

marketing, innovation, product development, strategy