Innovate Where You Differentiate

This article originally appeared on the American Express OPEN Forum site, and is today’s Wednesday Work Wisdom…

I subscribe to the 20/80/80 principle. The idea behind this concept is to focus your energies on the 20 percent of those activities that create 80 percent of the value. This can mean concentrating on the customers that create the highest revenue potential or on the products that provide the greatest leverage return. Once mastered, you can spend your 80 percent on other activities that produce even more long-term value. But how do you know what those activities are?

In my book Best Practices Are Stupid, I describe a model called “The Innovation Targeting Matrix,” which helps business owners evaluate their business activities and put each into one of three categories: support, core and differentiating. Doing this helps them determine which areas are worth focusing their 80 percent on.

Support
Activities that fall into this category are those that help you run your business, but are not the business itself. Although many assume that human resources and finance fall into this area, the reality is that there are parts of every function that are “support” in nature. What distinguishes these activities is that customers don’t pay for or value them, and they don’t create direct value for your business either. Therefore, your strategy should be to outsource these activities to a low-cost provider. Or, if they are truly low value, eliminate them altogether where possible. For example, I hire someone overseas to handle my audio transcriptions. Although I could eliminate this activity, I have deemed enough value to continue with it.

Core 
The next level represents your “core” activities, which are any activities that create direct customer value. They typically range from shipping and customer service, to sales and new product development. For core activities, consider simplifying, automating, improving (e.g., Six Sigma) or, in some cases, outsourcing to a strategic partner. If outsourcing, look to hire organizations or individuals for whom this work is a differentiator. For example, I’m not a marketing expert and my clients don’t pay me for my marketing expertise, so I retained an Internet marketing company because its results set it apart in the marketplace. In this case, strategic outsourcing makes the most sense. It’s important to note that just because something is a core function—like sales—does not mean that everything a salesperson does is core. Related administrative work may be a support function, while other aspects of sales may be differentiators.

Differentiating
At the highest level are your “differentiating” activities. These are what separate you from the competition, and they represent the unique reasons why customers buy from you and not someone else. What makes you different? Is it some particular aspect of your service? Do you have a unique pricing model? Are you able to give customers access to something they can’t get elsewhere? Do you provide a feature no one else can offer? Any activity can be differentiating. There are aspects of HR, for example, that enable your organization to stand out. Identify these activities in every department. Spend your time on those activities that set you apart from your competition, and innovate where you differentiate.

In addition to using the Innovation Targeting Matrix, entrepreneurs should ask themselves the following questions to help focus their energies on the most important tasks:

• Am I the best person to execute this activity? If not, get someone else to do it. When possible, only engage in activities that you deem to be your strengths. I hired a branding company because branding is their strength, not mine.
• Is this activity something I enjoy doing? If not, consider having someone else to do the work. Creating strategic partnerships is essential to my business, but I find the work exhausting, so someone else handles this responsibility on my behalf.
• Is this activity something I need to do? This is often a tough question. From my experience, much of the work we do provides negligible value; however, we convince ourselves it is necessary. Surfing the Internet, being sidetracked by emails all day long and other distractions disguised as opportunities should be eliminated.
• Does this activity give me leverage? This is a critical question. Think about it this way. For some activities, an hour of work rears an hour of value. When my income is based solely on speaking to groups, there isn’t a lot of leverage. I’m limited by the number of hours in the day. Personal/executive coaching often has even less leverage because you’re having an impact on only one person at a time. When I license my work to others, there is greater impact as they do the work and I make the money with minimal effort. In this case, one hour of work on my part can lead to hundreds of hours of value. Selling can be leveraged too. Instead of selling once and making one sale, find a channel whereby they can create dozens or even hundreds of sales for you.

Why invest in activities that don’t yield the greatest return? There are only so many hours in a day, so focus your energies on activities that you enjoy, that are differentiating and that create leverage. Using these strategies will help you stay one step ahead of the competition.

7 Ways to Outsmart Your Brain And Be More Innovative

You are alive today.  You were alive yesterday.  You were alive the day before that. This is good news from a survival perspective.  Unfortunately it is bad news from an innovation perspective.

Your brain is wired to keep you alive.

Your brain makes the assumption that because you were alive yesterday, what you did previously is safe. Therefore repeating the past is good for survival. As a result, doing things differently, even if it seems like an improvement, is risky.  Perpetuating past behaviors, from the brain’s reptilian perspective, is the safest way.

This is why innovation is difficult for most individuals and organizations.

Innovation is about change. It is about doing something different than you did previously.  It is about trying something that you have not done before, and therefore may feel is a danger to your survival.

How does the brain’s survival instinct prevent innovation–and what can you do about it?  Here are seven ways to outsmart your brain.

Challenge No. 1: The brain wants pains solved first. The brain is wired to minimize loss. We want to keep what we already have. Equally, we are not interested in something new, until we address our pains. The brain seeks preservation over pleasure.
Solution: Recognize that people want their pains solved more than anything else. Be the aspirin. Innovation is not just about creating something new and different. It should solve a problem that people have. Infomercials are especially effective at demonstrating this.

Challenge No. 2: Expertise is the enemy of innovation. We build neural pathways to known solutions. What we know best (or in some cases have heard most recently) becomes our default answer. Unfortunately, once we find an answer to a problem, we stop looking for other possible solutions.  As a result, the tried and true wins out and we get more of the same.
Solution: Keep looking.  Although this sounds simple, don’t stop with the obvious answers. Keep pushing until you are out of ideas and then still push forward.  Ask “who else has solved a problem like this?” A whitening toothpaste was developed by studying how laundry detergent whitens clothes.  A medical device manufacturer learned how angioplasty balloons expand and contract by studying car airbag deployment.

Challenge No. 3: The brain wants solutions, not problems. In the world of business, we hear the expression, “Don’t bring me problems, bring me solutions.” From a survival perspective this makes sense.  When faced with the possibility of being eaten by a lion, we don’t want to study our navel. Action is critical. However, in the world of innovation, the “problem” is actually more important.
Solution: Ask better questions. Einstein reputedly said, “If I had an hour to save the world, I would spend 59 minutes defining the problem and one minute finding solutions.” Instead of asking for broad ideas such as how to increase revenues, first identify the specific growth opportunities, untapped markets, emerging trends and current roadblocks. Then find solutions to those more focused challenges.

Challenge No. 4: The brain craves commonality. Contrary to conventional wisdom, opposites do not attract. It is safer to be in a tribe of people who think the same way.  Things get done quickly.  It feels effortless.  But the downside is that it thwarts innovation.
Solution: Work with people who are not like you.  Find people with different backgrounds, personality styles, and interests.  Appreciate their contribution to you and your professional efforts.  For example, I am someone who is disorganized and despises plans or planning.  As a result, the first person I bring on to my team is a detail-oriented project manager who can make sure ensure that I get everything done.

Challenge No. 5: The brain sees what it believes. The brain uses a pattern matching technique called “confirmation bias.”  In a nutshell, it rejects anything that is inconsistent with your belief structure. This is why two people can listen to the same political candidate and hear completely different things. From an innovation perspective, this may have us get attached to certain ideas, despite evidence proving that they are probably duds.
Solution: Avoid getting wed to your ideas by getting someone to play devil’s advocate.  Any time you think to yourself, “Wow, this is a great idea,” get someone to poke holes in your logic.  Don’t go to the same people for input.  Seek out people who you suspect would reject the idea.  Learn from them.  Refine your solution based on numerous perspectives, not just your own biases.

Challenge No. 6: Your brain only sees a fraction of reality. What you focus on expands, to the exclusion of everything else.  The brain’s reticular activating system is designed to filter out 99.99 percent of the stimuli out there. This prevents the brain from being overwhelmed by information.  Unfortunately, as a result, you miss out on opportunities because you cannot even see they are there. When you are a technology expert, the solution to every problem involves software/hardware. Opportunities are limited to your frame of reference.
Solution: Sometimes you need to purposefully retrain the brain. Attend conferences unrelated to your work. Read magazines from different industries. This is why I don’t read books on innovation, but instead read about neuroscience, psychology, and sports performance. This helps me see more of the world and find opportunities in places I wouldn’t have thought to look.

Challenge No. 7: The brain thinks too much: The dorsolateral prefrontal cortex is the judgmental part of the brain. It is analytical and calculating. This is great for decision-making that requires logic.  But it can kill innovation. When athletes choke, they are over thinking and constrict the neural pathways that allow access to their deeper capabilities.
Solution: Quiet that part of the brain through meditation, yoga, showering or any other relaxing activity. This allows you to gain access to the creative parts of your brain. Aristotle found his greatest breakthroughs while napping. One company found that they could speed up the development of new product ideas through meditation first thing in the morning.

The brain is incredibly powerful. And it does its job exceptionally well: perpetuate the species. It does this by ensuring the survival of the individual and the gene pool. Although this is of course valuable, it does limit our ability to try new things. Perpetuating the past is the surest way to survive. But for organizations, doing what you did in the past is the fastest path to extinction. By knowing how your brain is wired, you can choose to both survive and thrive.

This article was published on the American Express OPEN Forum.  Please comment, like, and share from there.

 

Stalin Was Right…Statistics Don’t Matter

Back in 1995, I was driving Accenture’s (then Andersen Consulting) business process reengineering practice. I traveled the world helping companies downsize. Although downsizing wasn’t the objective of reengineering, it was often the outcome.

While working on one particular project, I knew that 10,000 people were going to lose their jobs as a result of our work. Somehow I was able to rationalize away the impact on the lives of so many people.

Three is More than 10,000

That is, until I was watching a television show about three executives from that very company who were laid-off a year earlier. One person cried the entire interview. Another was optimistic even though he had not yet found a suitable job. And the third person committed suicide.

The next day, while at the client site, I confirmed that the stories were true. I immediately dismissed myself and never returned to the project. After watching that TV show, I could no longer be a contributor to even one lost job.

Stalin once said, “One death is a tragedy; one million is a statistic.”

As I discovered personally, 10,000 lost jobs was a statistic; one lost job was unbearable.

Big Data and Human Desire

Lately, innovation and innovation marketing has been left in the hands of statisticians. It lacks the personal touch.

Big data is driving the decision-making process in many organizations. But numbers cannot address the subtleties of human desire. Statistics only capture what we see on the surface, and can rarely tap into deeper needs.

In order for an innovation to be successful, it does of course need to tap into the needs of the masses. But sometimes the best way to find those needs is to look at the individuals. Listen to your customers directly; not just through surveys, focus groups or data mining as these methodologies can have significant drawbacks.

Surveys and focus groups tend to lead consumers down a particular path due to the way questions are structured. Also, the questioning process taps into the conscious mind; buying behaviors and hidden needs are often only uncovered by tapping into the subconscious.

Data mining, analytics and big data typically capture information about existing customers. But it does little to identify needs of non-customers and ex-customers. Plus it can only capture information about current products and services.

Capture the Customer

Instead, observe your customers. Watch them in action. Watch their struggles. Look for unarticulated needs. What are their pains? And find ways of tapping into their personal interests so that you can share their individual stories and contributions.

One company that has done this particularly well is Kimberly-Clarke. They launched their Huggies MomInspired Grant Program. In a nutshell, mothers who have an idea for a new product can obtain funding and support to bring it to market.

Although the products address the specific needs of one mother, as it turns out, most parents have the same issue. And in many cases, these opportunities are not uncovered through surveys or data mining.

One added advantage of the Huggies program is not just in the identification of new products. The inventor becomes the spokesperson. They become an evangelist, telling their personal story. It is the personal story that humanizes the product making it more appealing to consumers.

Emotion Sells

Humanizing is the key here. Buyers can’t relate to statistics, generic features and functions. But they can connect with the stories of individuals whose lives are changed. People buy on emotion, not intellect. They want a human connection.

If you want to innovate effectively, stop dealing only with impersonal statistics, data and numbers. You do this by identifying the real impact your product or service has on the consumer through observation or stories.

My speeches are to hundreds or thousands of people. At the conclusion, clients often conduct satisfaction surveys. While I generally receive the highest ratings, the responses are too abstract for me to get any real value.

Yesterday I had received a letter from someone who attended a recent speech. He said that the techniques I shared enabled him to solve a problem that had plagued him for a decade. This one personal example provides more value for me than 2,000 “very happy” responses and “great energy” comments on a survey. In addition, this example had an impact on my motivation; I felt energized. It also helped me understand what is really resonating with the audience and I can continue to refine my offerings.

If you own a small business, receiving a high Yelp rating is great. But that is impersonal. Gather stories from customers, in their own words. Go beyond the evaluation of the food, dry cleaning, or whatever you offer. Learn about the deep impact that your service has had in the lives of others. Has your restaurant brought families together? Has your dry cleaner freed up time so that parents now have time to spend with their children?

You are not selling a product or service. You are selling an emotion.

Read the rest of this article on the American Express OPEN Forum

3 Steps for Creating Leverage in Your Business

“Work smarter not harder.”

This dreadfully overused phrase is meant to address the apparent lack of time, money and resources we experience in our work and personal lives. But how do we translate these words into something actionable? Here are three methods I have used in my business to accomplish this:

1. Focus on what matters. Over the years, I have studied numerous organizations and have found that only about 30 percent of the typical day is spent on activities that directly create value. For example, sales representatives devote on average only one-third of their day with prospects. The remainder is allocated to administration, travel, meetings, and other less valuable activities. The same is true for almost every other “knowledge worker” in an organization.

To get more done, focus on the critical tasks while eliminating, delegating, outsourcing, or automating less important activities. I have seen many individuals go from 30 percent to 50 or 60 percent with little effort using this method.

While working at a major computer manufacturer many years ago, I was able to cut my 80-hour a week workload to less than 20 hours simply by using this strategy. It took only a weekend of analysis and implementation. This allowed me to focus my energies on activities that really matter, while helping others find time saving strategies.

2. Leverage sales channels. The ultimate goal is to maximize results with the least amount of effort. You can accomplish this through leverage: generating disproportionately large returns with a minimal investment.

Let’s look at selling again. Traditionally, to sell more, you identify prospects, create sales collateral, develop marketing materials, and then directly solicit potential buyers. This is a linear strategy. If you make a sale, it is one sale.

To create exponential growth, consider working with businesses that already have the relationships you want to build. One partnership with the right distribution channel can lead to hundreds or thousands of sales, without any extra effort on your part…

Read the rest of this article on the American Express OPEN Forum

7 Tips to Sell Your Ideas Like a Motivational Speaker

“You don’t listen!”

All of us have likely heard these words spat at us in frustration at some point in our lives. And guess what, it’s true! The fact is that no one listens.

In a previous OPEN Forum article, I wrote on how to more effectively hear what others are really trying to say. By recognizing how you listen (or more accurately, don’t), you can then better understand the way others listen. This in turn arms you with the ability to speak in a way that will have you be heard.

Effective innovators and business leaders need to “sell” their ideas to others. But too often we fall into unproductive behaviors that prevent our message from coming across.

What are these barriers and how can you conquer them? Having given hundreds of speeches in 43 countries, I have learned a few tricks on how to be heard more effectively, whether you’re speaking to a big audience or just one client or employee.

1. To be heard, first hear. While speaking on Capitol Hill in Washington D.C., I became painfully aware that everyone was more interested in being heard than hearing the perspectives of others. How can you be heard in this environment? Listen. Appreciate their point of view, even if you don’t agree with it. People can sense when you are not open to what they are saying and will thus be less inclined to hear you. Acknowledge differences in opinion and appreciate others’ perspectives.

2. Build an emotional connection. When starting a speech, you want to connect with the audience emotionally. Why should the audience care about what I am going to say? What’s in it for them? What benefit will come from listening? Buy-in is rarely done on an intellectual level. People are more likely to listen if they can relate to you and your message on an emotion level. Does what you offer—your product, service or idea—solve a problem? Can you speak to a pain they have?

3. Know your audience’s style. I’ve found that although American audiences typically like my speaking style, people in other countries are sometimes put off by it. For example, if I use my high-energy style in England, I can be viewed as overly enthusiastic and not taken as seriously. I find that a more professorial approach works there. Equally, when speaking to scientists, I use a different style than when speaking to advertising agencies. In order to be heard, match your style to that of the audience.

4. Avoid a one-size-fits-all approach. Everyone makes decisions in different ways. Even though I may be interested in the novelty/coolness factor, others want to know the scientific evidence and facts. Some are more interested in the practicality of your solution while others are more concerned with the impact on others and are driven by emotions. When speaking to larger groups, you need to address all of these styles. But when talking to someone one-on-one, speak to the style of the individual.

5. Don’t preach. Coach. It is fine to be passionate about your topic, but being dogmatic and closed-minded prevents others from being interested in your point of view…

Read the rest of this article (and comment) on the American Express OPEN FORUM site

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