New Unknown Knowns: You'd Better Listen To The Crowd's Pain

All right, so I'm not entirely sure if I'm using the famous "known unknowns etc etc" formulation correctly here, but bear with me. This is a short cry of existential pain about the connected world we live in, and how our reliance on it has introduced a whole new level of risk to business and anxiety to our personal lives.

Here's the thing: I had an email outage last week. (It may even still be going on, for all I know.) I didn't know I wasn't receiving emails until someone asked me over the phone why I hadn't responded to something. And you know what? I immediately thought that the problem was theirs, not mine. Because there's no symptom in my environment telling me my email's down - or, worse, intermittently down - and because I'm one smug, self-satisfied, savvy citizen, I just motor on, assuming that any glitches I notice out the window are nothing to do with me.

I only realised that I did indeed have a problem when I idly punched in the name of my ISP into the search box at Twitter. And, oh boy, was I enlightened. I am not alone! Also - I'm learning some really filthy new words.

Then I noticed that my spam filters aren't quite so clogged with the rubbish that normally accumulates in them. This gives me, if you will, a scientific observation that could have backed up an outage theory if I'd had one in the first place. But I didn't have an outage theory at all: the whole realm of service failure hadn't once occurred to me.

So, what should I do in the future? Become more paranoid? I'll certainly be leaping on Twitter ahead of Google next time something doesn't smell right in my environment.

As for customer support: well, who needs it? My ISP grew to prominence by embracing self-service as fully as possible to keep its prices down. The company had to improve its live agent customer service as competition increased. But now Twitter's here, it's absolutely inundated. Basically, everybody in the world can see every single complaint that's being made. You'd be a fool to go the normal customer service route and get a ticket in the closed system, wouldn't you? You're better off @-ing these guys on Twitter and getting some marketsquare attention.

My conclusion is that, after years of predicting this kind of live-action public-humiliation scenario for businesses, I missed the actual arrival of this era. I missed the moment when Google's real power over business passed to Twitter. Don't you miss it too.

Erase this belief from your memory circuits: "What I don't know can't hurt me." What you don't know could be destroying you.

IdeaPaint

Courtesy of Fast Company, here's one of those products that's so simple and obvious it's hard to believe no one saw it before. Cover your walls in IdeaPaint, and they turn into a whiteboard.

Is IdeaPaint an innovation, or just an invention? That depends on whether people want to switch to the new technology, which is cheaper and more flexible than conventional whiteboards, but which does need some extra prep work. It also depends on who fits out your office (or, gosh, home), and whether they'll go for the new process they'll need to apply, rather than install, this whiteboarding solution.

I like the idea of whiteboard paint, and I note that blackboard paint has been available for many a year. I also notice that despite the growth of online collaborative tools, most creative group work still gets done in rooms with pens. I guess the committed handyman could combine IdeaPaint with Johnny Lee's Wii whiteboard hack to create a physical/digital collaborative environment - or, at the least, a self-recording whiteboarding room.

Do Or Die? Do A Dyson

Jennifer Harris mentions the "Semmelweis Effect" in a recent Management Today piece. Semmelweis discovered that getting maternity ward doctors to wash their hands regularly cut the mortality rate of mothers from 18% to 1%. This was in 1847. He was ignored and ridiculed.

Harris says that successful people can become resistant to innovation because they begin to see success as a right, rather than the outcome of work and thought. "The way to prove them wrong is to do a Dyson," she says: that is, go off and do it anyway.

For organisations to establish innovation as a process, they need to question their own complaceny, traditions and superstitions. Change is as much, if not more, about loss than gain. Loss of status or hard-won expertise in the face of innovation is a very real, if rarely articulated, fear.

Leaders need to remind those around them that successful organisations practise rational decision making. They move forward on the basis of sound analysis of good data. If a new process demonstrates the kind of performance benefit that Semmelweis achieved, then it gets implemented - no matter how cherished the theories it displaces.

How is it, then, that so many organisations seem to survive on a mixture of irrational decision making, poor innovation and luck? The truth is that they're either burning off a stockpile of good will, market momentum and inherited assets, or they're working some kind of monopoly. Everybody else gets found out.

Deep Restaurant Maths

"GBK [Gourmet Burger Kitchen] is set to launch a new style of restaurant featuring smaller-sized burgers in an effort to encourage greater frequency of visits from customers."

I've been pondering this snippet from PR Week ever since I first read it a few days ago. Much as I love GBK, I don't buy the idea that offering smaller burgers will make people go there more often. I suppose it might work on a planet where the only source of sustenance was GBK.

Mobile entertainment apps: state of play

Neil Robertson has written a very useful summary of the current state of mobile entertainment apps, via Mobile Monday.

A Ratio in the Eye of the Beholder

The Economist reports that Spotify has 6m users of its free, ad-supported service but only a "puny" 40,000 subscribers to its paid, ad-free service.

How puny is this? It's a ratio of 150 non-payers to every paying customer.

Now, if you regard the 150 side of the house as freeloaders who ought to be contributing revenues, then this looks like a poor deal for Spotify. But those 150 ad-listeners are more like folks browsing in a shop than people indulging in shoplifting. In many businesses, a ratio of 150 tyre kickers to every one buyer would look attractive. And those kinds of businesses are big ticket businesses.

So, here's the thing: is Spotify a big ticket business or a small potatoes affair? We're so used to thinking of music in pocket money terms that it's easy to classify Spotify as a small stakes player - one that can't pay for a legion of onlookers and enquirers with the revenues of its customers.

But Spotify is actually in the lifetime value game. Sign someone up for a monthly subscription, and you have a relationship with them. You're their music service, not their record store.

The Creativity Measure that Counts

"96% of business leaders cite creativity as integral to business success and recovery from the recession, yet 44% say they lack the skills and commitment to deliver it."

Marketing Week, 16 July 2009.

Read this: Lost in Navigation

Ovum's Jeremy Green writes insightfully and entertainingly on the state of play in location-based services here.

Or do I mean "location-enabled"...? Possibly not: as Green points out, visitors to London's 2012 Olympics may well spurn location-enabled services, while a location-based service for asthma sufferers is doing rather well. You see, there is a difference...

Quote of the Day

"The perfect [customer] experience is the optimal compromise, because perfection is an illusion."

- Mike Chester, Director of the UK NHS National Refractory Angina Centre, speaking at Henley Business School, 18 June 2009.

The Collaborative Car: Riversimple

Edie Lush writes in The Spectator about Riversimple - the open source hydrogen/electric car. There's innovation in every aspect of Riversimple, not just the engine.

For one thing, you can't buy a Riversimple car, you can only lease one. You pay around £200 per month and 15p per mile, and that covers everything. The company is therefore incentivised to make the car as economical as possible, and to make it run as long as possible. Instead of owning a car that rusts and depreciates, you lease a transportation service.

The open source aspect of Riversimple means that its vehicles can be adapted and evolved by other people. And, in a further marker of the company's commitment to sharing, it's a limited liability partnership rather than a limited company. And to top it all, the company's leaders are relaxed about the need to make a profit any time soon. What would Henry Ford say?

Read this: Hot Tub Technology

Hot Tub Technology

This is a gem of an innovation story. Dr Mark Barrett's idea is simple, elegant, understandable and very, very doable. It's based on a novel view of existing infrastructure, there's a clear business case and, cannily, Dr Barrett has left ample room for other people to refine the implementation plan, thereby building an active constituency for the scheme's promotion.

What is it? Well, Dr Barrett wants to switch your immersion heater on when there's excess capacity in the electricity grid. The UK's preinstalled network of 19 million heaters can then act as storage devices for power generated by "bursty" renewables such as wind and wave. And with plans to roll out smart meters across the UK gathering momentum, now's the time to make this innovation.

Read David Strahan's excellent article for the facts and figures.

Innovation threat, innovation fatigue

from: Alain de Botton, Status Anxiety, 2004

"Employees must in addition worry about the consequences of the pressure put on companies to introduce new and better products into the market place. For long stretches of history, the life cycles of goods and services were longer than those of the human beings who produced and consumed them. In Japan, the kimono and jinbaori went unchanged for 400 years. In China, people were wearing in the eighteenth century exactly what their ancestors had worn in the sixteenth. Between 1300 and 1600, the design of ploughs did not alter across northern Europe - a stability that must have given artisans and workers a reassuring sense that their businesses would outlive them. But product life cycles have sharply accelerated since the middle of the nineteenth century - destroying workers' confidence in the long-term integrity of their careers.

"Rapid defeats at the hands of new products and services are to be found in almost every area of the economy: canals after the invention of the railway, passenger liners after the introduction of the jet engine, horses after the development of the car, typewriters after the birth of the personal computer.

"The market's passion for change has a propensity to involve companies in product development costs so high that their very survival can depend on the successful launch of a single item. Companies can resemble palpitating gamblers who, instead of being allowed to retreat cautiously after a good run, are continually forced at gunpoint to risk their assets and the livelihoods of their employees on the outcome of a few wagers or even a single bet, as a result either amasssing vast but precarious riches or self-destructing."

Review: Reinventing Banking by Johan Kestens

• "We have learned that risk awareness should be as much a part of a banker's DNA as commercial astuteness."
  

There's no shortage of 20-20 hindsight masquerading as confident prediction now that business is getting used to the turmoil of the markets. But this paper from AT Kearney's Johan Kesten is that rare commodity: a clear and well-argued agenda for getting banking back on track, complete with convincing examples and actionable advice.

Kestens summarises the origins of the current financial crisis, focusing on the drying up of public debt in the late 90s, the systemic errors made in the risk ratings of new types of credit derivatives, and the breakdown of mark-to-market valuation models. He also pinpoints issues of governance, organisational culture and regulatory failure. Acknowledging that customers' appetite for innovative investment products is unsurprisingly low in the light of evaporating confidence, Kestens suggests that memories are short: "Will greed surface again over the next three years?"

Kestens marshals seven ideas that banks can use to rebuild their capabilities and reputations. His first area is risk management, where he calls for proper appreciation of risk management throughout the management ranks, more equitable compensation schemes, alternative risk assessment models, scenario planning and simulation ("war games"), new reinsurance strategies and improved risk reporting.

His second area is the redefinition of business scope, starting with an improved understanding of the organisation's actual versus stated scope. He advocates concentrating on core competencies, citing winners who've stuck to the knitting and losers who've diversified away from what they know best. He advocates shielding lines of business from capital markets by making greater use of internal financing - implying that institutions have been lazy in their use of their own resources. Kestens remarks that organisational excellence, including reporting, is a competitive advantage. He recommends focused acquisitions and disposals, and greater use of outsourcing.

The third area of attention is product reinvention. Here Kesten advises banks to counter the natural commoditisation of banking products through the use of affinity, emotion and loyalty - offering real ideas for repositioning product lines. He also discusses product and feature bundling, and customer life stage modelling.

The fourth area for concern is the rebuilding of brand and trust. Consistency, emotional connection, and full and transparent communication are the keynotes here. This section segues neatly into "Do real marketing", an appeal for banks to get better at event-based marketing, and to work harder to understand online behaviours - especially the wealth of intelligence being generated in social networks.

Kestens' last two areas for attention concern distribution and IT. On the distribution side, he urges better mastery of online channels and greater recognition of contemporary customers' savvy, while advocating better management of the purpose, design and location of physical branches. In the IT arena, Kestens makes good arguments for service oriented architecture (SOA) and, perhaps surprisingly, careful systems design - the days when it was okay to assume that computing power is free and limitless have gone. He also makes sound points on the need for careful sequencing of change in IT; programme management is a notorious tanktrap for IT transformation.

The full text of the paper - which includes a valuable appendix on the future of investment banking - is available here.

On Provocation Selling

Here's an idea: tell your customers what they should be worrying about. That's the proposal made by by Philip Lay, Todd Hewlin, and Geoffrey Moore in a recent issue of the Harvard Business Review (In a downturn, provoke your customers). Instead of trying to sell people the products you've made, or listening to their needs and matching them to the goods and/or services you supply, you take them a big, juicy issue and show them why they should be really, really concerned about it. Instead of asking them what keeps them awake at night, bring them something that will destroy any sweet dreams they're still capable of harbouring.

Lay, Hewlin and Moore advocate that you identify a critical issue, develop a provocative proposition based on that issue, and then secure a meeting. At the meeting, you lodge the provocation - and see what comes back at you. If the reaction isn't positive, you "retreat with dignity". If the reaction is good, you can move on to discussing war stories, and then offer to conduct a short, diagnostic study. 

I don't know that this approach is unique to the downturn, because I've seen it used effectively in boomtimes too. If it's done with too little preparation, the perps get known as scare consultants: they turn up every few months with a new strain of business-birdbrain-birdflu that's going to wipe everyone out unless the correct vaccines are ordered immediately. Most targets pass on these scare tactics, waiting to see if anyone else buys the line.

But if you have a good working relationship with your customers, then they won't see this approach as scare tactics. They'll accept that you're bringing the issue forward - together with a means of tackling the issue - because you care about the relationship and its continuance. 

This ought to be common sense; but I've noticed that some service suppliers have incorrectly internalised the principle of offering "no surprises" and now interpret it as meaning "no bad news". It's worth remembering that if there's something in the environment that's going to bite and maybe swallow your customer, that's a kind of surprise they don't want. As a trusted partner, it's part of your duty to zap these incoming asteroids before they hit the surface.

A further warning: don't feel you need to manufacture an issue in order to justify a provocation. Do some real research. Ask your people what the issues are in your domain, and you'll quickly discover the topics that your best folks feel aren't getting the airtime they desperately need. With so many of the old certainties stuck in intensive care, now is a good time to reflect critically on where your customers are heading - and how you can help them avoid the obstacles lurking over the horizon.

MoSoNe: Mobile Social Networks: 2 - Mind versus Theory

Which term to use: “mobile social networks”, or “mobile social media”? I used to think that the two phrases meant the same thing. But I've changed my mind. (I'm allowed to change my mind: it proves I've still got one to change.)

When I think of “networking”, I think of goal-oriented behaviour carried out by people who have a theory of the social space they are investigating. The theory in play may be complex, and it may be dynamic, but it is still a constricting force. Networking doesn't have to be aggressive, but it is always instrumental. When people network, they are looking to match other individuals against predefined criteria. Wherever you have matching, you have narrowing. That's why old-fashioned checkbox-based online dating, and to some extent newer-fashioned speed dating, are so good at helping people repeat their previous relationship errors.

But when I think of “media”, I think of bits of dialogue, of jokes, strokes, pix and li(n)ks. I hear conversation. And conversation is fluid. Even where conversation begins with an agenda in mind, it often strays into unplanned areas. Media enables and encourages undirected exploration, and co-discovery by members of a community. Those members don't define themselves by attributes; they reveal (and conceal) their interests through their engagements with others, and via the materials and observations they choose to share. The activity in the “social media” space is surprising and creative. When commercial interests infiltrate these spaces and try clumsily to assert their own agendas, they are quickly ostracised. Social media, then, is self-cleansing.

So, “mobile social networking” is for people with a theory, and “mobile social media” is for people who want to participate in an emergent, collaborative space. Mobile social media is, I believe, a new state of mind: a truly shared experience that its participants are generating and evolving moment by moment, message by message.

Cig Int: the new smoking gun

I happened to walk past a building where I used to work recently, and stopped to see who is now using it. It's what you might call an iconic building, but on a homely scale. That's because it's a converted Victorian church. The old name is writ large in the brickwork, but to read the nameplate on the door you've got to get up close. That's how I met the guy on the cigarette break.

He asked me if I needed any help, which is a reasonable query to throw at some nutter who's squinting at your nameplate, and getting all dewy-eyed. And he told me what the company he works for does, and I thanked him, and I went on my way – knowing much more about... Okay, I won't say.

I mentioned this micro-event on Twitter, and my Twitterfriend @reyes responded, wondering if “you could do a London tour of technology just by being at the right cigarette break at the right time?” He went on to say that you could probably blag yourself a free seminar series.

And that's a pretty good idea. The spooks have “sig int” - signals intelligence. We could have “cig int”.

I'll stress that the guy outside the church didn't tell me anything confidential, or express any opinions about anything – he simply told me what I could have found out from the company's website. But it's possible that if you were less scrupulous than me (or do I mean smarter?), and you were targeting someone less alert and less honourable, you might be able to find out something interesting about the operations, prospects or mood of your target organisation. I know that if I were a recruitment consultant, and that if anyone was recruiting anyone for anything, I'd be learning to smoke (I'm sure there are courses) and getting myself out there.

I also think that marketers could probably learn plenty by sidling up to smokers on their breaks. I mean, you know where they work – more or less, because they may have been told to stand a little way off from the office. Now you can subtly also ask them where they do their grocery shopping, or who they would vote for tomorrow, or whether their boss is looking stressed.

Legend has it that long, long, ago, when smoking was compulsory, agents of the tobacco companies used to steal butts from the ashtrays in selected bars so that they could see what brands were being smoked in which types of establishment. They ran a sideline in reporting on the most popular shades of lipstick, as revealed by the butts, to the cosmetics companies.

Now that only the most committed people continue to smoke, and they're forced to indulge their habit in the street, they represent potential points of intelligence vulnerability for the organisations that employ them. It's no longer what they leave behind that's of interest: it's the fact that they exist at all, and might be up for a chat.

Small World: How do we know the people we know?

My good friend and lightning co-farmer Brendan Dunphy was one of the select group of people who bullied me to look at Twitter way back, when I was convinced it wasn't for me. Of course, Brendan was right – as he is about everything, darn him. Twitter's perfect for me, because I can't shut up. And because I'm nosy. And because I like bumping into new people.

I've met a bunch of new people through Twitter. Not by trying to describe myself, or by looking for points that I have in common with other people – but by starting conversations, and joining in conversations.

How do I know the people I know outside of Twitter? Through shared experience. I went to school with them, I worked with them, I danced with them in a cage in a sleazy warehouse joint in Budapest – the usual sort of thing. We found ourselves occupying the same patch of earth at the same time, and we got talking.

But the data stream generated by Twitter hints at tantalising new possibilities for making connections. A couple of weeks ago, I hooked up with Brendan for a coffee. He was going on to an event run by NESTA, the UK's leading light in innovation. That evening, as I thumbed through my Twitter feed, I noticed that another guy I follow was tweeting from the very same event.

Not surprising? I mean, if I'm into researching and writing about innovation, surely people I know are going to cluster at the same waterholes? But the thing is, the person tweeting from the NESTA event wasn't part of my “innovation” cloud. He's in my follow list because I found him, at random, on the public timeline, where Twitter presents a real-time sample of current tweets. And I was interested in him because he was tweeting about a train service I use. When I looked through his past tweets, I got the impression that he and I were, so to speak, fellow travellers. I wanted to follow his train comments – because I've often thought I'd like to see inside the heads of other commuters. (They don't say what they're really thinking when they use their mobile phones. They say: “I'm on the train”, and “Mummy really wants you to have your bath, darling”.)

My dilemma is: do I introduce these two people to each other? Fans of networking say I should – that I must. My more rational self points out that this pair could have met each other IRL at the waterhole – they don't need me to matchmake.

I haven't connected Brendan with my train-travelling friend, and for a very good reason. I don't know what they would talk about. I need more than a coincidence of place to create a genuine connection between two other people. I learned this last summer when I introduced the only two people I'd ever met who'd been to Antarctica – and they had nothing to say to each other. (“Cold, innit?”)

Do the Hoxton: innovation by critique

Sinclair Beecham, co-founder of Pret a Manger and originator of the Hoxton hotel, talks about his approach to creating innovative businesses in today's Times.

He hates the "breakfast buffet" that other hotels do - that spread of pre-cooked bacon and eggs, sweating under lights - so he banned it from the Hoxton. In fact, he designed the experience of his hotel by refusing to do all the things he doesn't like as a hotel guest. So, out go the ruinous phone charges, and the WiFi fees.

But as well as taking the nasty stuff out, he's injected virtuous practices from other leisure outlets. Chief among these is a yield-managed approach to room prices. Prices rise the later you book - just like at EasyJet. "At least five rooms a night go for £1", acording to the Times.

Pret reinvented the sandwich by returning to what real customers wanted. It's one of the few companies that has the moral right to that overused word "passion". In Beecham's case, it seems passion is a key not just to customer insight, but to empathy. He's building his hotel business by critiquing the practices he sees around him, and gearing his actions to his own judgements. His clarity puts him in a distinctive line of entrepreneurs who don't just think about their businesses, but who feel them too.

Genius, madness, or an accident of exposure?

When the environment changes, players with attributes that used to draw little attention can suddenly loom large. Their capabilities, or attitudes, look novel even though they've been around for a while, working away at their niches. The current economic turmoil is like an environmental disaster that's purged the business landscape of its heavy hitters, but given more hunting space to lesser, nimbler, more creative creatures. These may be the “new companies” of the next few years, even though they are in fact well established, or are busy reviving business models from earlier eras.

But today, it's impossible to determine if any of these newly-exposed forces is a real candidate for future world domination, or whether it perhaps represents another evolutionary dead end. Take, for example, the CD and DVD buying company Musicmagpie. In a time where people are looking to conserve cash and are even giving away fewer goods to charity shops, a service that buys unwanted CDs and DVDs looks like an interesting proposition. I'm not going to say anything bad about them, and will quickly declare an interest: they're meant to be sending me a tenner, and I hope they enjoy listening to my mid-90s Britpop purchasing errors as much as I didn't.

Musicmagpie is like an anti-Amazon of CDs and DVDs, buying anything that has a valid barcode number and is in good physical condition. But I can't understand what the business model is. Are they going to try and resell the discs? If so, who do they think is going to buy them? Perhaps they just want to be the “bad bank” of media, sucking all the toxic music and movies out of the cultural economy.

The other example I've noticed in recent days is Miroma. Now, I'm not sure I have this exactly right, but my understanding is that Miroma is a marketing agency that will offset some of its fees by taking some of your products off you instead of cash. It's getting coverage at the moment because it sounds like a strategy for companies to keep up their marketing campaigns while tightening their budgets. The odd thing is, Miroma was founded in 2003, not 2008. A return to barter looks fashionable in a climate where pundits want us to believe that we'll soon be living in caves and eating cockroaches. But if a company is stuck with, say, an airfield full of cars that it can't shift, why would a marketing agency be any better at moving them?

These two companies have been revolving in my mind because they both represent the tragedy of finished goods. They are each addressing the oversupply of inventory and promising to supply liquidity. Before the economic downturn monopolised the brain cycles of managers everywhere, much thought was being given to sustainable production, and particularly the avoidance of overproduction. One of the aims of “just in time” manufacturing is to avoid building stuff that you can't sell and can't then decompose or repurpose. Musicmagpie and Miroma both seem happy to chomp on all this stuff, and if they can gain sustenance from it, then the very best of luck to them.

Waterhole Studies: more lessons from the animal kingdom

If only they could talk... Well, I suspect that if animals could talk, they'd tell you how much they hated Rex Harrison in Dr Doolittle. After that, I think they'd have five basic messages in their repertoires:

* I'm at the waterhole
* I'm eating
* I'm lonely
* I'm threatened
* I'm still eating

My experience with Twitter so far is that pretty much all the messages created by real-life Twitterers can be derived from one of these basic statements. (In case this sounds snobbish, I must stress that I derived this theory from my own practice, and then looked for corroboration in the wider tweet-flow.)

So, whenever I tweet that I'm going somewhere or meeting someone, I'm making a waterhole moo. When I talk about the cool new thing I've bought, I'm basically squalking about food. If I complain about other Twitterers, or the people flitting through my real-time, real life existence, I'm signalling that I feel threatened. When I complain about feeling unwell, I'm also advertising my threat level. Everything else – and I mean everything – is about loneliness: or, if you want to be upbeat, about the need for community. Because it's social media, right – and we're being sociable.

Why does this matter? I think that companies interested in how consumers are thinking will be investing more attention (and dollars) in analysing the online zeitgeist expressed in micro-blogging. And I think some of these analyses will be wrong. They'll put too much weight on the transient events triggering tweets, and not enough on the underlying themes of those tweets.

For example, “much of England” was recently hit by a substantial snowfall. (“Much of England” is, in this instance, a polite way of saying “London”.) Superficial analysis of the tweetflakes might suggest that British people are intensely interested in wrapping up against the cold, or in battling to work, or in bonding with their kids in the park. A goodly proportion of the tweets take their cue from the news media, who are emitting and amplifying the idea that “we should have been ready for this”, because “they can deal with snow in Stockholm and New York”.

So – should you rush out and sell skis? Well, I don't think so. Because I think most of these tweets are waterhole tweets (“I made it to work!”) and the rest are loneliness tweets (“I didn't make it to work!”). What I would be looking for in this mass of tweets would be comments about which stores were doing a good trade, and where panic-buying broke out, and what people were panic-buying.

"The New Age of Innovation"

The New Age of Innovation: driving co-created value through global networks, by CK Prahalad and MS Krishnan.

One of BusinessWeek's top innovation books of 2008, The Age of Innovation may have a hard time being accepted in the new economic climate. There's an assumption about abundance of both capital and connectivity which I think leaders are less certain of today. Yes, globalisation hasn't gone away, but we're seeing more barriers to creating flexible global supply chains. And the primacy of personalised customer experiences is looking a little less vital in a climate where customers are choosing to experience less, and are heading for mass-market, commoditised options when they are buying. But historical context is a cruel thing, and no one can be criticised for writing sincerely with the best information available to them. Prahalad and Krishnan have written a book which offers much food for thought for business leaders.

I'm particularly impressed that they put their weight behind business processes as a key differentiator in organisations' performance and ability to innovate. Their coverage of business processes includes a number of sound case studies and also incorporates an overview of the many definitions that have been proposed for the concept. The authors have a gift for expressing their leading insights with clarity and memorability; for example, that strategists exploit analytics to “amplify weak signals” or that firms have a “dominant logic” that can constrain their thinking. The authors' treatment of what they call “social architecture” is very useful and acts as a counterbalance to their material on IT, as well as being a more practical approach to organisational culture change than is found in many such works.

I think, however, that the authors miss a trick in relegating standards – particularly data and process standards – to a subordinate role. They emphasise that organisations need IT capabilities fashioned to their own unique opportunities while taking advantage of efficient, componentised technologies. They are also clear on the critical need for business process governance, with leadership and visibility at the very top of the organisation. The missing part for me is enterprise architecture, and – where available – industry architecture (such as the ACORD standards in the insurance industry).

The core principle of the book is that offers co-created with customers can and must be supplied by entities that are willing and able to see themselves as virtual organisations, marshalling resources as and when required to meet individual customer needs. The authors acknowledge that the drives towards customer-created offers and virtualised delivery have typically arisen from different sources. So, for example, much of virtualised delivery is a result of the desire to drive down operating costs by outsourcing and offshoring. Prahalad and Krishnan note that while Indian suppliers know they must move beyond the cost arbitration model, few are doing enough to evolve their business models beyond this initial logic.

But... curse these current times! It's hard to read of Indian IT service businesses today without thinking of Satyam. I also note The Economist's recent piece (12 February 2009) about the ownership structure of large Indian companies, and how family ownership practices may add risk to them. The New Age of Innovation is good on the need for transparency, efficiency and control, but its view on “social architecture” seems to live a little too much in the ideal conditions of the laboratory. Organisations exist within complex cultural conditions, few of which I believe we understand to any great depth, but all of which may impact our ability to direct the business with confidence.

And, as I read, I couldn't help thinking of the apex of the co-created product, sourced by a virtualised, globalised market: the self-certified home loan. “Innovation” is a dirty word in some circles, because it's been so often preceded by the word “financial”. Can there be a more frightening example of a product or service designed as a personalised customer experience and delivered by a fluid, ad hoc chain of suppliers? The immediate future for innovation may well lie in strategies for limiting personalisation and guaranteeing supply chains.

Compliance Meets Complacency

"I thought it was a little bit strange for somebody in that position, to be on the board advising them about risk who has no knowledge at all about risk and regulation [...] We were constantly being pushed back and constantly being told that things had to be put in a way that wasn't going to upset the business - basically that wasn't going to stand in the way of the sales culture at the time." 

- Anthony Smith, former manager of regulatory developments and group policy at HBOS, BBC News, 17 Feb 2009

Think Before You Send

It's easy enough to send a vanilla tweet when you mean to send a direct message, as most forgiving people will admit. As in many of the controversies that attend any news event generated by the BBC, the fact that an appointment was mistakenly communicated to the world via Twitter before an official announcement was made highlights normal human fallibility rather than gross incompetence, or technological ignorance.

What interests me is the fact that anyone within an organisation would choose Twitter - in either public or private mode - for internal communications. On the one hand, it's good to see social media (presumably) being used to improve the way staff collaborate. On the other hand, you'd want to hope that organisations already had effective systems in place for doing just that. I can't help wondering why a manager would choose to discuss a staff appointment via Twitter direct messaging rather than email, IM or good old phone.

Perhaps new forms of communication, with their informal styles, attract traffic precisely because there are fewer cultural constraints around them. While every corporate email comes trailing a lawyer-approved disclaimer and a plea to save the forests, Twitter is awash with effing and blinding. I doubt that anyone in a line management post in an organisation with established HR processes would write an email containing a casual value judgement about a member of staff; Twitter's 140-character, real-time style seems to encourage that most dangerous of qualities - honesty.

Evoi: Social media for financial markets

I came across Evoi in the unnecessarily good London free newspaper City A.M. Jessica Mead wrote a piece about it in the edition of 22 January 2009, interviewing director Martin Hollands. The article explains that Evoi lets financial market traders see other traders' positions and publish their own if they want.

This is interesting because it's bringing a sense of the old open outcry market back to financial trading. Hollands says: “You are getting a real feel for real trades”.

And Mead says: “Algorithms might be the name of the game in the big investment banks, but for the smaller players, getting an idea of what traders are actually doing, rather than what they say they are doing, is immensely helpful and arguably levels the playing field a little.”

Doctrine tells us that markets are, in themselves, information systems. The price of a stock or a commodity supposedly encapsulates all that is known about its standing and performance characteristics. Therefore traders should be able to take decisions simply by responding to price movements. And algorithms – computer models and programmed trades – can do that for them.

Evoi call the information in its community “flow”. Users can watch what other traders do, and follow their lead if they want to. They can benchmark themselves, and improve their consistency. They can also shield themselves from the misinformation that's layered into financial markets even though, officially, it isn't.

This is the first example I've seen of social media adapted for the financial domain. But if social media belongs in any commercial context, it belongs here. Reclaiming the trading activity for traders has got to be a good thing: I'd trust the herd instincts of frontline traders over backroom analysts any day. I can imagine that becoming a leader in the Evoi world is a position of some status, too – not one that could be earned easily, or held on to without sustained performance. And that means, ultimately, the trust of the community.

Waterhole Studies: Finding the prize herds on Twitter

The architect Christopher Alexander, who gave birth to the design patterns movement through his writings about buildings and neighbourhoods, made an interesting observation about cows. While transport experts and city planners liked to say that communications needed rational design, and that you couldn't just “pave over the cow paths”, Alexander said that laying roads where the cows led was exactly the right thing to do. Cattle, you see, know where they're going. They're heading for water. And they're taking the most efficient route to their goal across the terrain. In a country like the UK, most of our land routes probably trace back to the purposeful travels of animals looking for water. The humans followed the beasts – and built Croydon.

I remembered this when searching for a name for a new field of social media studies that popped into my head recently. I was going to call it “Self-Selected Star Diaspora Studies”. But I can't see that doing very well on the international conference circuit, can you? So I'm going for “Waterhole Studies.” And I'm certain that it's soon going to be a topic aired at virtual (and real) watercoolers.

How did I stumble upon this soon-to-be crucial area of frenzied activity? In the best tradition of the lone, lunatic inventor, I was looking for something else. I was, in fact, trying to see if I could find people on Twitter who worked for Google, so I could sneak up on them. Being a somewhat literal person (when I'm not being tangential and tendentious), I plugged the string “at google” into search.twitter.com.

As luck would have it, while I was doing this, the good citizens of the US (and many other countries) were celebrating the inauguration of Barack Obama. Because, out there in the real world beyond my office, it was Inauguration Day. So what did I find? I found a bunch of people tweeting that they were at Google's inauguration party. I found a waterhole.

I guess that if you're a dab hand at programming you could knock up a utility to tag the people you find tweeting at a waterhole, and create a follow-group. As it is, I added the (doubtless bewildered) Google/Obama folks to my follow list, where they are now undifferentiated. I enjoy my Twitter feed based on the content, after all, not on a person's affiliation or his/her past party invites. But there are definite possibilities here, aren't there? People are essentially volunteering to tell the world at large when they're at particular events – events which may have implications for their social, professional or economic standing. And that information is potentially very valuable.

For example, when there's an important sporting occasion in progress, wouldn't it be interesting to know who's enjoying hospitality in the corporate boxes? If you want to know who's got tickets for an exclusive preview, now's your chance to grab a sample. And if you want to track customer loyalty across coffee shop chains, I'd say your chances of gathering meaningful data are looking up.

Zhiing-ifying London

I like the look of zhiing, a mobile location service emanating from California. The key things it's got going for it is that it's platform-neutral, service provider-neutral, free and straightforward.

But it's based on the idea that you drive, or that you're being driven around. That makes sense in the US, but it's a little limited here in Europe, where the directions you need might involve public transportation too - and even, whisper it now, walking.

Transport for London's brilliant Journey Planner gives travel options for trains, tubes, buses, trams and river buses. Look carefully at the advanced options and you can also grab a tailored cycling route. This would be immensely difficult to do well on current mobile platforms if the full graphic content were to be carried. But translated into the equivalent of turn-by-turn instructions, it could be zhiing-ified. And that would be great!

Lessons in Scaling Up

Esther Addley wrote a wonderful piece in the Guardian about Josh Silver's project "to offer glasses to a billion of the world's poorest people by 2020", distributing "100 million pairs annually" within a few years, with each pair costing only a dollar - and no profits being taken.

Professor Silver is clearly an inspired and inspirational figure, as well as being immensely practical. His project and his approach to it illustrate some key recurring themes of innovation.

Silver's story falls into three distinct phases. There's the sudden burst of insight, or the dawning of the idea: what if someone could adjust the power of their own spectacles, so that they didn't need an optometrist? The second phase is invention – in Silver's case, a period lasting longer than two decades, during which he and his team have developed an ingenious mechanism involving liquid lenses. The third phase, which Silver has now embarked on, is the diffusion phase, where the invention leaves the laboratory, enters production – and goes out to change the world.

The compelling core of Silver's idea echoes a number of breakthroughs in consumer goods and services. His self-tuning glasses remove the professional constraint on growth imposed by the need for a skilled middleman, just as Eastman's photography system turned us all into everyday photographers. Early automobile manufacturers doubted that cars could become mass market products because there wouldn't be enough people available to train as chauffeurs. In more recent times, skilled programmer availability was seen as a limiting factor on the growth of computers. The productivity advances we have experienced in white-collar settings also largely flow from technologies that cut out intermediaries, whether it's dedicated typing pools, counter clerks or, in these days of business process outsourcing, entire back office teams.

But I think the more impressive lessons that innovators can take from Silver's project are to be found not in the breakthrough characteristics of his idea and invention, but in his methods of diffusion. Firstly, Silver has declared very solid goals. Aiming to distribute 100 million products at a dollar each every year is an unambiguous goal that can be shared, broken down into component plans, and interpreted flexibly across different territories. The irresistible phrase "2020 vision" also helps the project's messaging.

Secondly, Silver is growing the project by networking. He is making use of organisations and connections that already exist in the places where he wants to make an impact. He is using networks to spread knowledge of the project and its benefits, to stimulate demand, and to recruit partners.