Behavioral Innovation

A fantastic talk by Umair Haque, Director of Havas Media Lab on Behavioral innovation and the Great Compression.

He gave this talk at the Brite (Brand Innovation and Technology) Conference.

Umair’s key message was that for business to survive they need to redefine how they treat  innovation. We have a global crisis where the economy underestimates costs and overstates benefits. A company wants to maximize profits by making consumers worse off. Consumers are being sold things they do not need. (e.g. mortgages)

He argues that the value businesses are creating today is inauthentic, brittle and unsustainable.  Many industries today are unable to survive the global crisis.

To get past this we must re-conceive value creation. Value creation is done through innovation.

Innovation is normally addressed with strategic output likes launching better products, shifting from products to services, redesigning value chain, managing resources more efficiently, profit centers etc…. all management innovation.

The problem with this is that it has companies acting strategically and strategic behavior does not spawn the type of innovation we need now. We need innovation that allows a company to reinvent itself yesterday for tomorrow’s challenges.

An example he provided was Google- they think beyond strategy and always have. He compared it to Microsoft where the strategy has made them very rich, but they are unable to grapple with challenge of re-invention required for today’s economy.

He suggests that we move away for strategic behavior (dominance, control, brand, differentiation) and use 5 paths of behavioral innovation to unlock new sources of advantage.

5 paths to Behavior Innovation

Stewardship

  • Is about not exploiting resources to point of depletion.
  • Think about advertising- it has been over done.  The cost to advertise got too high, there were too many ads and now consumers don’t want to see ads anymore. Now the media industry is struggling with reinvention.

Trusteeship

  • Is about the good, always playing on a level playing field.
  • Not manipulating people.

Guardianship

  • Is about the common good.
  • Nobody is looking for the common good when everyone behaving strategically.

Leadership

  • Is about challenge.
  • Having willingness to disrupt yourself.
  • Challenge the status quo in your company and industry.
  • Doing things in a different way.

Partnership

  • Is about outcomes.
  • Focuses on people’s outcomes.
  • Making people better off in some way. (e.g current food industry does not see people as partners- the obesity epidemic).

Definitely worth watching..

Umair Haque at BRITE ’09 conference from BRITE Conference on Vimeo.

Detroit’s Decline

A step away from what I usually talk about, but I just came across Time’s photo essay
entitled- Detroit’s Beautiful, Horrible Decline.

United Artists Theater, Detroit

United Artists Theater, Detroit

It’s the type of imagery that we’re used to seeing in war torn cities where buildings have been riddled with gunshots and ravaged with bombs.

But in Detroit, it’s a different kind of war- an economic one. A war that begun with the demise of industries and its infinite ripple into the economy.

Plants shut down, people lost their jobs, more business closed, people moved, house prices fell, investment dried up and the city began to die.

It is true that cities are structures, building and geography, but their heart has always been the people. It’s a combination of societies, communities, cultures and their economies that keep cities alive and moves them forward.

As economies struggle in this current climate, it’s never been more important for societies, communities and cultures to work together to fight for their home, fight for their city. If they don’t, one day we’ll look back and see what once were beautiful, flourishing cities have now become ghost towns.

Credit Crisis Visualised

A fantastic video explaining the Credit Crisis. What is a complex topic is explained clearly in an engaging narrative.

It was made by Jonathon Jarvis as part of his thesis for a media design program.

Check it out: The Crisis of Credit Visualized

Taking Inventory

Wow it’s been a long time since I posted anything on my blog. I am going to have to blame computer burn-out, which has subsequently been cured with a 4 week holiday only logging on for the occasional email. :-)

Anyway, a lot has been happening since the 5th of August as the world walks on egg shells waiting for the US government to approve the billion dollar bail out plan.

I have been particularly interested in the coverage relating the future of Web start-ups in this time of economic turmoil. Half the commentators are doom and gloom and others trying to  remain positive and offer advice on survival.

As unemployment rises, credit contracts and people need to tighten their spending, any business needs to take inventory of where they are at and evaluate the situation.

The first and most important question is- do we have the money we need to survive? Can we keep operating?

Ultimately, money should be coming from customers from a sound business model and good revenue streams. This is essential. You need this to survive and it’s required if you want someone to invest in you as you will need to demonstrate how they are going to make money out of their investment.

The second question is (are)– am I executing an awesome product and are we a great company with an awesome customer experience?

In a time when the economy is contracting there is no room for mediocrity. If I have to choose between a great product or a mediocre one, I will choose a great one. If I have to choose between a company with friendly customer care or one that doesn’t return my emails, I am going with the friendly crew. If my disposable income is shrinking I need to be selective on things I am going to pay for, so I want the best.

What does your inventory tell you:

  • Do you have money to survive?
  • Is your business model solid?
  • Are you building an amazing product?
  • Do you treat your customers well?

Infinite vs Scarce Components

I have been doing some research on the psychology of free and came across an interesting Tech Dirt article from last year.

What really stood out was the step after defining your market- ultimately you want to grow your market share, so you should define what you can give away for free at no real cost to your business. To do this you need to define your infinite and your scarce components.

Your infinite components are things that you have in infinite quantities and you could give away for free and your scarce components are things, which are tied to your “free” infinite components, but you would charge for.

So for an online application- you may give away usage of the application because you are only developing one version and you can support an infinite number of users at no extra cost, but you may charge for additional storage, customer care, value-add features— anything that will enhance the experience of using the product.

Definitely worth a read

Festival Talk- an hour with Joesph Stiglitz

Every second year in Wellington, an Arts Festival of great magnitude is unleashed. It’s quite a spectacular event as acts from all over the world in Theater, Dance, Music, Art and Literature are asked to come and perform/speak in New Zealand. As NZ’s remote location makes it expensive to travel to and from, this festival is a great opportunity to see what’s hot in the performing arts arena in the rest of the world.

As part of the Readers/Writers’ week- the festival brought over Joesph Stiglitz to speak. Dr. Stiglitz is a very big brain. He’s a 2001 noble prize winner, former head of The World Bank, former Chairman on Clinton’s Council of Economic Advisers and current professor at Columbia University and an accomplished author.

I wasn’t a fan of the format of the talk because he was being interviewed by a journalist who was unable to offer pure Q&A without giving his own journalistic spin/opinion on each topic. However, I did enjoy the content.

A couple things that stuck out from this talk were:

  • Stiglitz is a democrat
  • GDP as a current measurement tool is ultimately flawed
  • The USA have a great GDP- one reason behind this is that they have the most people in prison per capita. This means that there is less unemployment because people are being paid to build prisons and the individuals who may otherwise be unemployed are in prison. What does this say about the economy?
  • Countries need to invest money in their children, health and infrastructure if they want to be sustainable
  • Gloabalisation is not all good
  • The American government is propping up their fragile economy until the election in November
  • The world will feel the impact of the slowing US economy. China will use this time to take a breather from its constant growth
  • It is a failure of Reserve Banks to only measure inflation as they should also be considering unemployment
  • Government does have a role to play in markets; regulation is important to prevent corruption
  • To prevent the inflation of the housing boom- how about tax a little less on wages and more on housing capital gains- which he believes mostly comes from luck
  • The developed world needs to re-think the way they live because if India and China become such huge consumers, the planet will not survive. We have the resources and technology to test ways to improve the planet- we should be doing it now

I am not sure if a copy of this presentation will be online, but I’ll post it if I find it. In the meantime, if you are interested in hearing more from Dr. Stiglitz- here’s a link to an interview he did with Carnegie Council.