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.