My Favorite Blog Posts of 2011

Given that we are in a new year, I thought it might be nice to reflect on the past year.  So today I want to share with you my favorite blog entries from 2011.  I chose my top 10 for three categories: 1)innovation & creativity, 2) general business, and 3) life and happiness.  Admittedly, the articles I like most tend to come from the last category as they are more personal in nature.

The articles are not listed in any particular order, but the asterisks do indicate the crème de la crème (in my humble opinion).

And don’t forget, these only represent the entries from 2011.  I have been writing since January 2005 (7 years) and have over 500 articles on this blog.

I welcome any and all comments (e.g, if I missed one you liked, or if one should be taken off the list).  Enjoy!

TOP 10 INNOVATION AND CREATIVITY ARTICLES

1. *** Freedom Can Limit Innovation
2. *** My ABC News Interview (and other media)
3. *** My Article in Southwest Airlines Magazine
4. *** Ask a Different Question, Get a Different Answer
5. *** Ideas, Ideas Everywhere…
6. Why Brainstorming is Stupid
7. What I Learned From an Expired Bottle of Mayo (AMEX OPEN Forum)
8. Is Thinking Choking Your Creativity? (AMEX OPEN Forum)
9. Stop Asking for Ideas (AMEX OPEN Forum)
10. Why Edison Was Wrong (AMEX OPEN Forum)

1. *** How to Publish a Book in 2 Weeks (AMEX OPEN Forum)
2. *** Before You Can Multiply You Must First Learn to Divide (AMEX OPEN FORUM)
3. *** Your Customers Are Cynics (AMEX OPEN Forum)
4. *** I Won’t Work for Money
5. *** Why You Should Work with People You Don’t Like (AMEX OPEN Forum)
6. How to Create a Happy Work Environment (AMEX OPEN Forum)
7. Tactics for Captivating Your Audience (AMEX OPEN Forum)
8. 7 Strategies for Running Your Business While Pursing Your Passions (AMEX OPEN Forum)
9. The Performance Paradox (Idea Connection)
10. How I Used Crowdsourcing the Wrong Way And What You Can Learn From It (AMEX OPEN Forum)

TOP 10 LIFE AND HAPPINESS ARTICLES

1. *** Balance of Work and Life is a Myth (AMEX OPEN Forum)
2. *** How to Embrace and Conquer Pain (AMEX OPEN Forum)
3. *** How to Always Be On Time (AMEX OPEN Forum)
4. *** When You Sit on the Fence, You Get Splinters in Your Ass! (AMEX OPEN Forum)
5. *** How to Be Selfless by Being Self-Centered (AMEX OPEN Forum)
6. *** How Losing Personal Attachments Can Help You Realize Ambition (AMEX OPEN Forum)
7. *** How to Create Luck in Business and Life (AMEX OPEN Forum)
8. The Key to Immediate Happiness (AMEX OPEN Forum)
9. Is It OK To Marry Your Work - part 1 (AMEX OPEN Forum)
10. Is It OK To Marry Your Work - part 2

 

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How to Publish a Book in 2 Weeks for $200

I realize that book publishing does not directly relate to innovation.  But I have had so many conversations with people about this in recent weeks that I decided to write an article about it. 

This article is nearly 3000 words in length.  As you will see, if I double (or triple) the length, this article could become a book.

It seems as though everyone wants to write a book.  Well, actually everyone wants to publish a book.  Few people want to write one.  Unfortunately, most people don’t know where to start and therefore become undermotivated or overwhelmed.  The result?  Good intentions; no book.

But what if you could have a bookstore quality paperback in your hands in two weeks?  And what if you didn’t have to do much writing?

Here’s a technique you can use to publish a non-fiction book in a fortnight.  I recently wrote a book in a few days and had a published version in one week. 

To do this, you must use a print-on-demand self-publisher and not a traditional publisher.

Business books work best with the method.  Fiction requires an entirely different approach.

Before you get started, there is one question you must answer…

[Read more]

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What Innovators Can Learn From Vegas Card Counters

Which will help your business be more successful: statistics or probability?

Underwriters at insurance companies use statistics to assess future risks. This is based on years of collected data.

Probability is what card counters in Vegas use to increase their odds of success. This is based on real-time, real-life experience.

If you want to play it safe, use statistics. If you want to win big, use probability.

There Are Lies, Damned Lies, and Statistics – Mark Twain

Businesses are increasingly using statistics to manage decision making, as evidenced by popular books like Tom Davenport’s Competing on Analytics and the boom in CRM system usage.

The belief is that if we gather more data we can make better decisions. But this may not be true when it comes to innovation.

If you are crunching numbers, you are probably gathering information from existing customers. This will give you insight into their buying habits, usability behaviors, and other patterns. But most likely you are only gathering data on YOUR customers.  This represents the middle of the bell curve or the norm. This information may be useful in “incremental” improvement, but it will rarely lead to significant innovations.

When you move beyond the norm to the far ends of the bell curve, you will find the real interesting ideas.

Being normal is not a virtue; it denotes a lack of courage

On the far right-hand side of the curve are the market leaders; the advanced users. They may not be your customers because you can’t meet their high-end needs. Or maybe they were once your customers and they left. When someone is not a customer it is difficult to gain insights into their wants and needs. If you could somehow understand their perspectives, you may find opportunities for “advanced” innovation and insights on where the industry may be going in the near future. These innovations would be more radical, yet continuous in nature. Think of this as the Blu-ray improvement on the standard DVD (we’ll save a discussion on the demise of HD DVD for another time).

On the far left-hand side of the curve are the laggards; the less sophisticated users. Your products/services may be too advanced, too complicated, or too expensive for their needs. Again, you are probably not gathering statistics on these individuals or organizations. But here lies the greatest opportunity for discontinuous innovation.  Or as Clayton Christensen would call it, disruptive innovation.  If you can find a way of “dumbing down” your offering, you might find new and untapped sources of revenue. Quite often these products become the de facto standard, much like when PCs replaced the more sophisticated mainframes and mini-computers.

The problem is, it is very difficult to get data about the ends of the bell curve. Focus groups, surveys, and other traditional data gathering techniques are useless. I love this quote from Scott Cook at Intuit: “For every one of our failures, we had spreadsheets that looked awesome.” We can use numbers to justify anything we want. But quite often they justify the wrong actions.

The Probable is What Usually Happens – Aristotle

If a statistics-driven innovation model does not work, what would a probability-based model look? Probability tells me that if everything is equal, the more bets I have, the more likely one will be successful. The odds of 1 success out of 200 are greater than 1 success out of 20.

But how can you have more bets without diluting your effort and potential returns? The key is to learn as you go. This is exactly what card counters to.

Let’s contrast a more statistics-driven model with a probability-based model. To do so, we will use two exceedingly simplistic examples. With innovation model #1, you make a few “big bets” based on analytics you gathered from your customers (a statistics-driven model). Innovation model #2 is a more experiential “learn as you go” model (a probability-based model).

In both examples, let’s assume you have $100 million to bet, woops, I mean invest in innovation.

[Read more]

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How to Target Innovation

When I conduct executive training, one of my favorite activities requires participants to consider a typical set of processes common in the insurance industry: Develop Products and Services, Customer Service, Manage Revenues, Manage Distribution Channels, Market Products and Services, Underwriting, Claims Fulfillment, Manage Provider Network, and Plan and Manage the Enterprise.

I ask the group to tell me which process is most important to an insurance company. Quite often, the first answer will be Claims Fulfillment. “Why?” I ask, and they will say, “Because this is why customers get insurance in the first place.” I usually respond that Claims Fulfillment is a very important process, but I want to know which is the most important process. Someone will then suggest Manage Revenues because it is how the company makes money. Again, I commend them for their answer, but I still want to know the most important process. This goes on for a while, until nearly every process has been suggested. Eventually I stop the group and say, “Okay, I am going to give you the answer to this one: ‘It depends.’”

I then tell them about the strategies of four insurance companies serving relatively similar markets.

Unum Insurance. Unum is the market leader in disability insurance, a firm that differentiates itself by its skill in assessing and pricing risk. Unum claims, for example, to have such finely tuned data that it can distinguish the difference in risk between left-handed and right-handed doctors who drive Volvos and live in New Jersey.

Progressive Insurance. This company has achieved a remarkable level of excellence in claims processing and, as a result, has become one of the most profitable firms in the industry. Progressive’s loss adjusters operate from vans with cellular communication links and computer workstations. Driving around their assigned territories, they are often at the scene of an accident before the police. In many cases, claims are processed on the spot, and it has been known for a check to be handed over by the company’s loss adjusters at the site of an accident.

State Farm. Competitive positioning for State Farm depends on its exclusive (and extensive) network of agents and offices. Its wide geographic coverage is reinforced by the company’s motto: “Like a Good Neighbor, State Farm Is There.” The firm differentiates itself from the rest of the pack by this type of branding.

USAA. The customers of USAA are primarily in the transient, mobile military services. Because its customer base is so mobile, USAA tries to be as helpful as possible to its customers. At one time, USAA was the world’s largest user of toll-free numbers, which it uses as the main means to communicate with customers. These investments have paid off. In 2007, USAA was rated the #1 Business Week customer service company.

What is the most important process to Unum? It is Underwriting. For Progressive its source of differentiation is Claims Fulfillment. For State Farm, its Distribution Network is critical because the large volume it generates spreads its risk across a broad swath of the population. And USAA is focused on Customer Service. Capabilities that are strategic for one organization may well be less critical for another in the same industry. All four of these companies are essentially in the same business, but each concentrates on a different process to achieve its competitive advantage and its differentiation in the marketplace.

What is YOUR most important process? When I ask this question of CEOs, top executives, and employees, there is typically a very long, uncomfortable silence. Most people do not think of their business in these terms.

Although the question is simple, the answer requires significant reflection and alignment. And answering this question is important for determining your innovation strategy. In particular, how to focus your innovation investments. Companies have limited resources that must be invested in the processes that will have the greatest impact on the bottom line.

Here is a framework I use to help organizations prioritize their innovation investments.

Consider that your processes fall into three levels of strategic importance: “differentiating,” “core,” and “support.”

Differentiating processes (or I prefer the word capabilities) are those that set you apart from your competition. These are your most important capabilities. Ideally you only have one or two of these capabilities. At USAA, for example, this is Customer Service.

Core capabilities are critical to your business, but are not your source of competitive advantage. These create direct value for the customer. For a manufacturing company, core capabilities might include order fulfillment, order acquisition, and product support.

Support capabilities are necessary for running the business, yet are not considered core. Quite often, these are thought of as HR, IT, or finance.

Categorize all of your capabilities and then consider different strategies based on their position:

• Support work should be minimized, and ideally, outsourced as much as possible. Cost containment is the main strategy while still assuring high quality.
• Core work should be simplified and automated whenever possible. The objective is to turn these capabilities into well-oiled machines. Efficiency is the main strategy.
• Differentiating work is typically knowledge work and is where you want to make the greatest investments in innovation. Ideally, you want to empower knowledge workers to deliver non-cookie-cutter results that will continually set you apart from your competitors.

There are several important points to note with this model:

1. Because innovation seems glamorous, companies often try to focus on differentiators before they have a good foundation. This is a mistake. You must have your “core” capabilities working well (efficient, low error rates, high service levels) before you can start worrying about your differentiators.

2. The most valuable use of this model is not at the enterprise level, but rather when used within each capability. Even support capabilities have components that help differentiate the company. For example, a major consulting firm was re-evaluating its corporate training curriculum and used this model to assist. They first determined which classes provided capabilities necessary to beat the competition – that is, their “differentiators.” For these, in house custom courses were developed. For “core” consultant skills, they partnered with world-class training organizations to provide tailored versions of existing training. And for less important, support skills, they used off-the-shelf training modules (outsourced training).

3. Sometimes, your differentiating capability can be one that ensures that the work of others is repeatable and predictable. Wal-Mart invests heavily in the ability to connect stores, warehouses, and vendors through leading-edge technology. The employees who develop these computer systems are Wal-Mart’s most valuable knowledge workers. McDonald’s innovation labs help ensure that every customer gets the same quality hamburger.

4. If you are #2, #3 (or worse) in your industry, your differentiating capability should ideally be different than that of your leading competitors. When you are playing catch-up, changing the rules of the game is critical. It is hard to beat someone at their game.

5. Your differentiating capability should be something that is difficult for your competition to replicate. One service company I worked with claimed its “offerings” were its competitive differentiator. I asked the group, “How long after introducing a new offering does your competitor offer the same deal?” The answer was, “In as little as two weeks.” Unless you want to reinvent yourself on a weekly basis, you should find a differentiator that is difficult to replicate and is uniquely yours.

This is an extremely powerful framework, and its uses are unlimited.

What is YOUR most important process?

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Surveys Uncovers Surprising Results

Back in the 1980’s, executives used to joke that you would never get fired for buying “Big Blue” (IBM) computers. It’s not that IBM was the best, but you knew they would not screw up.

When I worked for Accenture (then Andersen Consulting), the Economist once called us “The McDonalds of the consulting industry. You know what you will get and it’s not fillet mignon.” People hired us not to get highly creative solutions, but rather to be assured of a successfully implemented solution.

There is a reason why consulting firms are so successful.

People choose safe, tried and true solutions over those which may be better yet have a risk of failure.

This is human nature. People take risks to minimize losses, yet play it safe when it comes to increasing gains.

But how much of a gain must be dangled in front of us before we will risk giving up the sure thing? I’ve been conducting a survey to find the answer.

Here’s the first question posed to respondents:

Which would you choose?

• Option 1: A guaranteed gain of $75K or
• Option 2: An 80% chance of getting $100K and a 20% chance of getting nothing

Our survey found that 75% of the people go for the sure thing, option 1. People play it safe when it comes to increasing gains. But how safe?

What if the upside is increased to an 80% chance of getting $150K? Now, 57% take option 2. Still, 43% play it safe, even though there is an 80% chance of doubling their money.

What if the upside is increased to $225K? 76% choose option 2. This means that, 1 in 4 people still play it safe even when the potential upside is 3 times the original amount. When we increase the upside to $450K – 6 times the original amount – we still have 20% of the people who go for the sure thing.

It appears that people believe the expression, “A bird in the hand is worth two in the bush.” Interestingly, the original Old English expression was, “”Better one byrde in hande than ten in the wood.” That seems even more accurate.

Ok, let’s look at the loss side of things.

Here’s the first question posed to respondents:

Which would you choose?

• Option 3: A guaranteed loss of $75K or
• Option 4: An 80% chance of losing $100K and a 20% chance of losing nothing

This time, when presented with a loss rather than a gain, 71% go for the riskier option 4. People take risks to minimize their losses. [As an aside, when I ask audiences this question, the percentage of risk takers is closer to 90%]

Increase the potential loss to $125K and 44% still go for the riskier option 4. When the potential loss is increased to $250K, 22% of the respondents still opt for option 4.

If you plot these responses (risk-taking probabilities against expected gains), they make a nice “S” curve as depicted in the graphic left.

What does this graph tell us?

It clearly supports the premise that people take risks to minimize losses, yet play it safe when it comes to increasing their gains. The loss of $1,000 hurts more than a gain of $1,000 feels good.

This means that you can sell someone more easily when you focus on losses rather than the gains. This might explain why Al Gore has been so successful with his “Inconvenient Truth.” Instead of focusing on the benefits of a cleaner environment, he focused on the “meltdown” associated with the status quo. Can anyone say Nobel Prize?

The shape of the curve also gives us a bit more insight. First, the gain of $2,000 does not feel twice as good as the gain of $1,000. Equally, the loss of $2,000 does not hurt twice as much as the loss of $1,000. There is a point where we become numb to the increased gain or loss.

Another potentially useful take-away is what I call the “risk/reward tipping point.” This is the point where the “S” curve flattens out on both the loss and gain side. This occurs at the point when 80% of the people take the desired action. And based on my research, this ratio is a little under 3.

What does this mean?

The hoped for win (the upside) must be three times the guaranteed amount in order for most people to risk the sure thing.

There is a reason why the status quo wins out in business, politics, and life. Rarely are we given options where the benefit is three times the sure thing/current situation.

On a final note, there was some interesting research on this topic…but with a twist. Researchers at Duke University, in a paper entitled “Sleep Deprivation Elevates Expectations of Gains and Attenuates Response to Losses Following Risky Decision” (Venkatraman, Chuah, Huettel, Chee), wrote that this risk-taking profile changes when someone does not get enough sleep.

When kept awake for 24 hours, the study (supported by brain scans) showed a double whammy: people became more optimistic about potential gains and they were also numbed to the negative feelings associated with losses. They would act riskier and have less regret (distinct from disappointment) about bad decisions. Their decisions were often bad decisions. If you go to Las Vegas, be sure to get plenty of sleep!

Our ancestors lived in a world of scarcity. Therefore it is not surprising that we do everything in our power to horde what we have. Unfortunately, our desire to play it safe can cause us to miss out on big opportunities. Risk taking is fundamental to innovation. And innovation is critical to long-term success.

If you want to see some of this stuff action, be sure to read my entry on 10½ Ways to Improve Your Life – By Losing. This may give you some tools to enable you to take healthy risks to improve your life and business.

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