Little Book Wordle

January 28, 2009

Just for fun, I put my “Little Book of BIG Innovation Ideas” into Wordle to create a word cloud.  It’s interesting to see the word density – as indicated by word size.  Fortunately, “innovation” was clearly the most used word.  Fun.

bookwordle

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Why Being Self-Centered is Good

January 27, 2009

This may seem like an odd blog entry, but it has been the topic of conversation over many dinners recently.

Although we are taught from a young age that being self-centered is a bad thing, I think that more people would benefit from being this way. Let me explain.

To start off, I am not suggesting that people should be selfish. I think of selfish as being “exclusively concerned with oneself.”

Being self-centered – in my opinion – is entirely different.

Centering is what you base your life on.

My parents are children-centered. For them, my sister and I are the most important part of their life. They live vicariously through us.

I have friends who are spouse-centered. They do everything in their power to please their partner.

Too many of my friends are work-centered. Their job is the most important aspect in their life. They get meaning from their career. It is no surprise that men are twice as likely to die during their first five years of retirement, than they are prior to retirement.

Others are service-centered. They give their lives to charity and others. They sacrifice their own well-being in the name of contribution. Oprah may fall into this category. One of the reasons she claims she put on all of her weight is that she did not spend enough time taking care of herself.

Which leads us to the benefits of self-centering.

Throughout your life, there is only one constant. You. Your children may pass away before you do. Your spouse may, in spite of all of your loving, leave you. Your job (as many people are finding out) is only temporary. Even service to others can be fraught with challenges.  If you center on someone or something else, you may be giving up control of your life.

Only YOU will be around for as long as you live.

Therefore, instead of centering your life on someone or something that may not be around as long as you, maybe you should try being self-centered. This gives you some level of stability in an unpredictable world. Even the Merriam-Webster dictionary definition – “independent of outside force or influence” – supports this notion.

Anyone who has flown on a plane has heard the flight attendant say, “If the plane loses oxygen pressure for any reason, the oxygen masks will drop down out of the small overhead compartment. If you are seated next to someone who might need some assistance, you should put your own mask on first, and then breathe normally as you assist the other person.”

Take care of yourself first. Be centered. Be grounded. Take control of your life and don’t get derailed by circumstances around you.

Being self-centered is NOT the same as being selfish. Those who are self-centered are NOT narcissistic, hedonistic, or self-absorbed. Because self-centered individuals are more grounded, they are able to give even more to others.  They have the potential to be even more generous and to make even greater contributions.

In some respects, this is in line with Maslow’s Hierarchy of Needs (pictured above). Self-actualization (which is where I put self-centering) is the highest level, higher than esteem, love/belonging, safety and physiological needs.  Interestingly, creativity is listed under self-actualization.

What do you think?

P.S. Some may argue a more theological perspective. For example, Stephen Covey (of the 7 Habits fame) authored, “The Divine Center: Why We Need a Life Centered on God and Christ and How We Attain It.” As I try to avoid religion and politics in this blog, I’ll leave this discussion for another time.

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Motivate Like a CEO

January 26, 2009

The ability to motivate your employees is one of your most important leadership skills. Unfortunately, too many leaders use outdated approaches that only temporarily increase motivation, but with long-term ill effects.

If you are a regular reader of this blog, you know that I almost never promote the books of others.  However, Motivate Like a CEO, by Suzanne Bates is special.

I know Suzanne personally and she is someone who walks the talk.  We work together on a board of directors, and she is one of the most thoughtful and thought provoking people I know.

More importantly, I love her motivation philosophy.  Suzanne asked me to read an early version of the manuscript and provide an endorsement.  After reading the book, I was more than happy to do so.  Here’s what I wrote:

Suzanne Bates does for business what Viktor Frankl’s Man’s Search for Meaning (my all-time favorite book) did for psychology.  Just as Frankl showed that people thrive when their lives have meaning, Suzanne demonstrates that companies thrive when they are designed around a shared purpose.

Today only, if you purchase the book, Suzanne will give you access to a number of “bonus gifts.”

Visit her site for more details.  I know you will enjoy this book.  I did.

P.S. This is my 400th blog entry.

P.P.S. Happy New Year to all of my friends in Asia…and around the world.

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EVA, SVA, and the Economy

January 23, 2009

While at Accenture, one of our analytical tools was Shareholder Value Analysis (SVA) – a tool based on Economic Value Added.  The premise is that by looking at a company’s financials, we can determine where to best target our innovation efforts.  The analysis can show us, for example, if reducing SG&A will have a greater impact on EVA than, let’s say, COGS.  It will tell us the impact on EVA if we increase sales by a certain amount.   It is a very powerful tool.  You can see the general model by clicking the image on the right.  The analysis is obviously a lot more complex.

This model works nicely in good times.  But does it work today?  What is it telling us?

I asked two of my ex-Accenture colleagues who are experts on SVA the following question:

Cost of Capital is part of the EVA equation. Given the credit crisis, how has this impacted EVA? Is cost of capital going up? If so, what does that mean in terms of where companies should invest then efforts? Or is it going down because the prime rate is so low? What does this mean that from a targeting perspective?

Here are the two responses:

Response #1: On the EVA question, theoretically the Cost of Capital is down given the prime.  But actually it’s up given the credit markets — the Libor is a good proxy (the rate at which banks lend to each other). The B2B rates are even worse, hence all the talk about the credit markets freezing up. In terms of targeting Cost of Capital, that’s a tougher question. Most of the action in EVA around the Weighted Average Cost of Capital (WACC) is related to more or less leverage. So targeting it would mean more leverage and there’s not too many companies that want to go in this direction now. In fact, we may have determined a “ceiling” on how far you can push on that lever.

Response #2: From a mathematical perspective, marginal cost of capital is fairly low these days. The availability of capital, however, is the real issue. In the current market it is difficult to raise capital. Therefore if an enterprise can generate excess cash and can identify opportunities with good returns they should certainly invest. It is no different for an individual. Assuming that a major catastrophe is not looming on the horizon and assuming that one has available cash, this is the time to invest. I should hasten to add that the “classical” capital market theories upon which WACC and EVA are based are NOT, in my opinion, quite valid in a tumultuous market where risk free rates are almost zero and people are simply keeping cash “under the mattress.”

Interesting thoughts.

My follow up question is, “Assumiung WACC is up, what is the relative impact of cost reduction versus revenue growth on EVA?”

What do you think?  I’d love to get many different perspectives on this topic.

P.S. I leave these financial calculations to the data experts (“spades”) and focus my energies on new ideas that solve problems (“diamonds”).

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Best Companies to Work For

January 22, 2009

Fortune Magazine released their list of the top companies to work for.

#1 on the list is the 7,000 person data storage company, NetApp.  They have some great business philosophies that show they treat employees like owners of the company – a key to creating a truly innovation organization.

The article says…

NetApp early on ditched a travel policy a dozen pages long in favor of this maxim: “We are a frugal company. But don’t show up dog-tired to save a few bucks. Use your common sense.”

Rather than business plans, many units write “future histories,” imagining where their business will be a year or two out.

Five paid days for volunteer work, $11,390 adoption aid, and autism coverage.

The company has gained market share during the slump, hasn’t had layoffs, and has more than $2 billion in cash on hand to help it ride out the global financial crisis.

Clearly they are doing something right.

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New Innovation Tweet Group

January 21, 2009

In addition to being able to follow me on twitter, I created a new innovation tweet “group” that is open to the public.  This is a chance to post questions and ideas to other like minded people.  Join here.

It make take a little while for things to heat up.  But once we hit critical mass, I think we’ll have some great conversations.

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Do Your Innovation Efforts Work?

January 21, 2009

Sometimes the question you ask is more important than the actions you take.

During President Obama’s inauguration speech, he said…

“The question we ask today is not whether our government is too big or too small, but whether it works – whether it helps families find jobs at a decent wage, care they can afford, a retirement that is dignified.”

This is brilliant in its simplicity.  The same thought applies to innovation.

The question you need to ask is not whether you are developing creative products, processes or business ideas, but whether your innovation efforts work – whether they serve your customers, serve your employees, and ultimately serve your shareholders.

Innovation is not about change for change sake.  It is about purposeful change that creates value that reduces costs, increases sales, or improves cash flow.

In these troubling times, asking the right question is more important than ever.  Do your innovation efforts work?

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A Business Idea Every Day

January 14, 2009

Could you develop a new business idea every single day for an entire month? That’s what my friend Susanne Goldstein has been doing since the start of the year. She is a “business accelerator and experience architect,” and she wants to find a source of passive income; money that comes in without her having to do all of the work.

Each day she calls me with her idea. I can’t share them with you, but all have been extremely interesting and varied. One is her idea for the next “pet rock.” Another is linked to travel, and in particular the airport. Others include an iPhone app, shopping aids, and a web business.

Here’s what is amazing about Susanne. In all of my years of working with innovation personality styles, I have never met someone who has mastered every style. She is creative (diamonds) and can develop a different, GOOD idea every day. She is incredibly disciplined and organized (clubs). We call her the “empathizer bunny” because she is so good at relating to people (hearts). And she can be strategic with a focus on value (spades). Learn more about Innovation Personality Poker.

Could you develop a new business idea every day? If so, maybe you should give it a try. If not, why not?

Here’s your homework…if you choose to accept it.

  • Develop a new business idea every day.
  • Honestly (with feedback from others) assess the quality of the idea.
  • Monitor your progress and commitment to the process. Are you doing it every day? Are you fully engaged in the process?
  • If you are not making “ideal” progress, ask yourself why. Are you lacking the creative skills? Are you lacking the discipline? Is it something else?
  • Finally, ask yourself, “What does this tell me about my innovation style? And what can I do to be more successful in the future?”

I am a high diamond. This means I am experiential – wanting to try lots of new things. Although I am less cerebrally creative than low diamonds (I’m more experiential), I am still quite creative. But I have almost no low club (planner) in me, therefore I lack discipline. That is why I partner with others who are a bit more anal retentive.

What’s your strength? What’s your Achilles’ heel? Who can you partner with to make you and your business more successful?

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Johnny Cupcakes

January 13, 2009

What do T-shirts and cupcakes have in common? A guy by the name of Johnny.

Today I spoke at an event for the National Foundation for Teaching Entrepreneurship (NFTE).  They are an amazing organization that teaches entrepreneurship to high school kids, many of whom are in the inner city.

I did a breakout session for about 50 students.  We had a blast.

The keynote speaker was Johnny Cupcakes (that wasn’t his given name, but is the name he now uses).

Ever since he was in high school, he has been an entrepreneur.  He bought candy in bulk at Costco and sold it to students.  He bought gag items (whoopi cushions, itching powder) and sold those – until one student had a bad allergic reaction that landed that kid in the hospital.  He made buttons that were sold in a comic book store.  While there, people gave him various nicknames – Johnny Appleseed and Johnny Cupcakes, for example.  One day, as a gag, he made a Johnny Cupcakes T-shirt.  People loved it.  He made more designs.  After selling them out of the back of his car for a while, he started selling them on the web.  His fan-base grew until the point he opened a store on Newbury Street in Boston.  This is a VERY fancy and expensive retail street.

Johnny is a great role model for the students.  He has never had a drink, never did drugs, and has dedicated himself to his business.  He said his happiest moment was when he could hire his mother as his bookkeeper so that she no longer had to do a job she didn’t like.  When I spoke with him after the event, he said he would never sell the company for any amount of money.  The business is now pulling in millions of dollars per year.

What does this have to do with innovation?  Quite a bit actually.

Johnny has dedicated his life to his business.  He even left college to stay focused in his business.  Most of the money he makes he puts back into the company.  He took big risks.  He signed a multi-year deal for $7,000 a month retail space.  You have to sell a lot of T-shirts to recover that kind of money!  He did a brilliant job with word-of-mouth marketing.  He has never done any advertising. But people line up days in advance when he launches a new line of limited edition T shirts.

And this is his brilliance.

Although he had requests to sell his shirts in all of the big stores, he declined.  He wanted his T shirts to be exclusive.  You can (for the most part) only buy his items from his stores and online.  The stores are AMAZING.  They are done up just like a bakery.  He has been meticulous with the details.  Mock ovens that open randomly shooting off steam.  Cupcake scent.  The doors to the storage room are made from huge 10 foot tall oven doors.  The T-shirts are displayed in bakery cases and refrigerators with the motors removed.  The labels in his T-shirts are in the shape of oven mitts.  The boxes are beautiful and are in the shape of a muffin box. He even sometimes throws random things in the boxes of T shirts ordered online (e.g., a battery, 37 pennies, or a baseball card).

I could go on and on.

In previous articles I describe the bell curve of innovation.  Johnny has been masterful at working the right side of the bell curve.  Exclusivity.  Creating an experience.  Limited editions.  Attention to details.  A conversation piece.  Johnny is not about T-shirts.  He is about a life style, a story, and an experience.

If you are not familiar with Johnny’s work, please visit his store or his website.  He’s an inspiration.

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