May 24, 2011
Being a professional speaker on innovation, I attend a lot of conferences and meetings. And I am always amazed at how poorly most meetings are run.
One things in particular disturbs me…
When meeting time is used to present things that could have been sent via email.
Don’t do it!
Meeting time should be viewed as a huge investment in the attendees. If you present information, status reports, or anything other static information that could be distributed before the meeting via email, you are wasting everyone’s time.
Next time you are holding a meeting. Look at the agenda. Decide what information can be disseminated in advance. Then use the meeting time for conversation, networking, experiential learning, action planning, and other activities that can not be accomplished easily through electronic means.
When done properly, meetings can provide great value with a limited investment of time.
May 18, 2011
I just returned from a fantastic weeklong cruise to the Southern Caribbean and noticed that it was structured similarly to others that I have enjoyed in the past.
Immediately upon arrival, there is much fanfare: champagne as you board; a band rocking out tunes on the pool deck; the captain and crew shaking hands and kissing babies. This is proceeded by an evening chock full of parties and gala events, including a black tie dinner. As the week progresses, the nights seem to be more low key. While there are still planned events, there is little in the way of hoopla. As the cruise nears completion, they pull out all the stops: another black tie dinner; a flaming Baked Alaska parade; headliner performances in the theater; numerous parties and celebrations.
The structure of the cruise got me thinking about a motto we have in the speaking profession: start your speech with your second best story and close with your very best.
Regardless of whether you are running a weeklong cruise experience, delivering a 45-minute keynote speech, selling a product or handling a customer service call, this is a great model for engaging customers. Start powerfully and end on a high note.
This process makes sense. By starting powerfully, you draw in your audience quickly, compelling them to listen. You then close in such a memorable way that they are left wanting more and are inspired to tell their friends. Be sure to create an experience—not just another conversation.
How can you accomplish this for all of your interactions?
First, plan your opening remarks. Don’t just wing it. If you are a speaker, have a compelling story crafted that you can deliver flawlessly each and every time. Or better yet, have several so that you can choose from one that will resonate with your audience. Grab their attention immediately by jumping right into the story. Ditch the “Thank you,” “Hello,” or “It is great to be here in Detroit.”
When crafting your opener, engage your audience. Don’t just speak at them. Use the word “you” more often than “I” or “we.” Patricia Fripp starts her opening story by saying, “I wish you could have been there.” This is an inclusionary tactic that increases engagement while reducing any potential creation of an egocentric view of the speaker. Another effective technique is to ask, “What would you have done in this situation?” This shifts the audiences from spectator to participant. These kinds of inquiries cause them to think, and thus engage.
These same techniques are not exclusive to the speaking world. Instead of just welcoming a customer who is browsing in the electronic section, you could start your dialogue with a fact: “Did you know that more customers buy xyz stereo than any other brand?” But use something more personal in nature.
If you are in a call center, what can you say that will engage the customer within the first second? If you are on site assisting a consumer, how can you build rapport with them instantly?
Once you have a strong opening, you can then engage them in appropriate dialogue about the product or service. This will take as long as necessary.
As you near the end of the customer interaction, close with your best material. Skilled speakers don’t end with “Thank you for your time.” They end with a story that leaves the audience on an emotional high. Give them something they will remember forever and will want to share with their friends. Even if they forget the rest of the speech, it is crucial that they remember the last few minutes.
What can you do to create a powerful closing experience? Is there a story you can tell? Can you make your customers feel uniquely special?My favorite story from the book Yes!: 50 Scientifically Proven Ways to be Persuasive by Goldstein, Martin and Cialdini, is one where waiters were told to give customers mints with the check. This action increased tips slightly. But when the waiter left the check and mints, walked away and returned minutes later giving a few extra mints and saying, “I really like you guys,” the tips went through the roof.
July 7, 2010
“Are You Smarter Than A 5th Grader?” is an entertaining show.
In the world of innovation, the biggest question is, “Are you smarter than a PhD?”
Here’s what I mean…
In Personality Poker we address four primary innovation styles. The spades are the ones who are, as we would say in Boston, “wicked smaht.”
We find that spades are analytical, fact-driven, and often quite intelligent.
One of the challenges with driving innovation into organizations is that smart people are often more interested in being right than doing right. That is, experts want to believe that they can solve every problem under the sun. Although this isn’t true, this pervasive belief can circumvent your innovation efforts.
Here’s a simple example…
A few years back, an InnoCentive client identified a very complex challenge they wanted solved. They posted this challenge to the InnoCentive.com website. Anyone who could solve this problem would get a cash prize. Dozens of solutions were submitted.
One of the solutions was submitted by an employee of the client. Let’s call her Sally.
Sally went to the individual who sponsored the challenge and said, “Why did you go outside to find a solution? I already had the answer.” She was clearly upset that her company went externally to find a solution.
Interestingly, Sally’s actions were the catalyst which helped this client build the case for open innovation.
When the evaluation team evaluated all of the solutions submitted, Sally’s was not viewed as innovative. It was the same type of solution the company had been considering for years. The breakthrough idea came from someone outside of their company and even outside of their industry.
The company now had proof positive of the value of open innovation.
To be clear, the objective of open innovation is not to replace the smarts you already have in your organization. It is to augment this brilliance. Most companies don’t have enough time to solve all of the challenges they are working on. Unfortunately, R&D people often get spread thin working on a lot of different types of challenges, some of which could be better solved by others outside the company.
Here’s a simple model I use to help companies determine which challenges should be solved externally, versus those that can be solved internally. Challenge fall into roughly three broad categories:
Simple: These are challenges that someone else has probably solved. Although you could solve them internally, this is not the best use of your resources. The odds are that someone else already has a solution that you could buy or license for less money in less time. Why waste your highly specialized experts on these types of challenges?
Unsolved: There are some challenges that are exceptionally complex that may have remained unsolved within your organization for years. Or maybe it is something that is viewed as outside your area of expertise. A well-worn, but useful example of this is the oil spill recovery in Alaska after the Exxon Valdez accident. For 20 years, oil/gas experts futilely tried to find a way to pump out the almost solidified oil at the bottom of Prince William Sound. Eventually, through a challenge posted on InnoCentive, they found a solution from the cement industry, not the oil/gas industry. John Davis, a chemist with expertise in cement, figured that if vibrating cement can keep it from hardening, then a similar concept can be adapted to keep the oil in the tanks from freezing. It worked and solved a two decade old problem. These challenge are also best solved externally because you can increase the level of diversity in your solver base.
Differentiator: These challenges fall into the sweet-spot of your organization. These are the challenges that your experts are best equipped to solve. By “outsourcing” the simple and unsolved challenges, you can allow your team to focus on what they do best. This will increase your ability to solve the problems that differentiate you from your competition. For these types of challenges, it is often useful to post challenges internally, using a tool like InnoCentive’s @Work solution. This allows you to tap into the collective intelligence of every employee, regardless of where they reside organizationally or geographically.
Smart people want to be (and should be) appreciated for their brilliance. They have dedicated their lives to the pursuit of knowledge. But as the late, great Will Rogers said, “There is nothing so stupid as an educated man, if you get off the thing that he was educated in.”
Everyone can not be educated in everything. Therefore, figure out what you (and your organization) do best, and find others to help with everything else.
October 4, 2009
We often hear that content is king. But I wonder if this is still true.
Let’s take some very simple examples.
I am sure most of you know that the iPod was not a revolutionary invention. It was merely a new spin on the already existing MP3 player. The real innovation was the integration of the iPod with iTunes. This changed the game. Using this model, the distribution of content became as important as the creators (the musicians) and the publishers (the record labels). Apple is now one of the most powerful and profitable players in the music industry.
I now own an Amazon Kindle. I have to admit, I love it (I’ll blog about that another time). But what strikes me is that we are seeing the same “content distributor as king” dynamics unfold again. In the book business, the author’s royalty is a pretty small slice of the pie. I should know because I just signed a two book deal with Penguin’s Portfolio imprint.
Here are some illustrative figures for a printed book (kept very simple using made up, yet not far fetched numbers) …
- An author can expect about 10% +/- of the retail price of the book. So if the book retails for $25, the author gets $2.50.
- The retailer expects roughly a 50% discount and then they sell it for whatever they can get. If they sell it for a 20% discount, they gross approximately 30% of the price of the book (about $7.50). Their profit is quite a bit less due to overhead costs.
- Finally the publisher gets the remaining 40% or so – about $10 a book. By the time the publisher has covered all of their costs, books that sell poorly can lose them money because they need to pay the editorial staff, the various designers, the printers, and the shipping companies.
As you can see, the creator of the content (the author) gets a small slice. The publisher of the content gets a small slice. And the distributor gets a small slice. The rest of the money is eaten up in various costs.
Enter in the digital age.
Book on Kindle sell for $9.99 as a rule (we’ll make it $10 to keep it simple). Let’s look at an illustrative breakdown now.
- The author gets 5% of the retail (eBooks typically get a lower royalty) – $0.50. As you can see, an author can make 80% less with a Kindle book.
- The publisher and Amazon split the rest in a way I am not privy to.
- The publisher’s costs are lower because they don’t need to pay for shipping and printing. They still incur the upfront design and editorial costs.
- Amazon’s costs are close to zero. They only need to pay a small amount to Sprint to provide mobile services. No overhead (except maybe some computer servers). No distribution. No warehouses.
In this model, I want to be Amazon. Everything sold is nearly pure profit. The content creator (me) is definitely not the financial king in this model. The publisher does fine. But the distributor appears to be the one in charge.
This concept of distribution as king appears in all areas. I was speaking with a seasoned consultant from the retailing industry. He indicated that a few years ago, the power shifted from the manufacturers to the retailers. Wal-Mart has the lion’s share of power in the industry and they now call the shots.
You could argue that Google has a similar position, although their financial model is a bit different (AdWords accounts for most of their profit). But like other distributors, they don’t create content. Instead they aggregate content from a variety of sources into one distribution system.
I just read on Friday that Comcast may be buying a 51% stake in NBC from GE. This shows how the power is moving from the creators of the content (the writers) and the publishers of the content (NBC and their production staff) to the distributors of the content – Comcast.
Are you a content creator or you a content publisher? Does someone else control distribution? Or, are there new entrants who might control distribution? Beware. The current and future distributors/aggregators of your content could be one of the most serious threats to your business.
More to come…
July 6, 2009
I define innovation as an “organization’s ability to adapt and evolve repeatedly and rapidly to stay one step ahead of the competition.” A culture of innovation, when done right, gives you a competitive edge because it makes you more nimble with an increased ability to sense and respond to change.
A culture of innovation has less to do specifically with new products, new processes, or new ideas. There are of course discrete innovations such as the iPhone or a battery that is powered by viruses (MIT has developed this). These are valuable and necessary in order to create a culture of innovation.
But a culture of innovation is more than new ideas. It needs to be repeatable, predictable, and sustainable. This only happens when you treat innovation like you treat all other capabilities in your business. This means having, amongst other things, a defined process.
An organization’s innovation process must achieve three things. It must:
- focus on the “right” challenges
- find appropriate solutions to those challenges, and
- implement the best solutions.
These translate into three “portfolios” an organization must create:
- A portfolio of challenges
- A portfolio of solutions
- A portfolio of projects
Let’s take each one at a time.
A Portfolio of Challenges
All companies have challenges. They can be technical challenges on how to create a particular chemical compound. They can be marketing challenges on how to best describe your product to increase market share. They can be HR challenges around improving employee engagement.
An organization’s ability to change (i.e., innovate) hinges on its ability to identify and solve challenges. Challenges are sometimes referred to as problems, issues, or opportunities. But at the end of the day, they are all just various forms of challenges. I will use these terms interchangeably here.
Where do you find these challenges? You can find them anywhere – from customers, employees, shareholders, consultants, vendors, competitors, and the list goes on.
Let’s face it, companies have no shortage of challenges.
And guess what, some of the most important challenges to solve are hidden due to organizational blind spots and assumption-making.
The “meta-challenge” for all organizations is to find which challenges, if solved and implemented, will create the greatest value. Given that organizations have limited resources and money, prioritization is critical.
My favorite quote (used many times in this blog) comes from Albert Einstein – “If I had an hour to save the world, I would spend 59 minutes defining the problem and one minute finding solutions.” Most companies spend 60 minutes of their time finding solutions to problems that just don’t matter.
Therefore, the first step in creating a culture of innovation is to surface, identify, and codify challenges. And then you must become masterful at valuing, prioritizing, and framing these challenges.
Think of your innovation portfolio much like you would handle a financial investment portfolio. You want some safe bets (incremental innovation) and some riskier investments (radical innovation). You also want a variety of innovations ranging from technical challenges to marketing challenges, and service challanges to performance improvement challenges.
Once you have the right challenges to solve, the next step is to find solutions.
A Portfolio of Solutions
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.”
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”).
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.
October 7, 2008
I just got back from over two weeks on the road. I was in and out of five airports. As you go through security, the routine is always the same…
- Take off your shoes
- Take out your liquids
- Take out your computer
Why are we put through these security gymnastics?
On December 22. 2001, Richard Reid was caught with plastic explosives in the soles of his shoes. That’s why we now have to walk barefoot through airports.
On August 9, 2006, two dozen people were arrested in the UK because they were plotting to bring liquid explosives on planes leaving Heathrow airport. Now we have to travel with miniature shampoos, shave creams and toothpastes.
Computers are scanned because, well, that’s the obvious place to look. I guess.
What do these have in common? For the most part, the security scans we now endure were due to cleverness on the part of terrorists. Rarely are we subjected to scans that are due to the cleverness of government agencies.
Are there ways to easily smuggle weapons on planes in spite of our increased security? Of course. Nearly every time I pass through a metal detector, I have metal collar stays in the dress shirt I am wearing. Although the detector never beeps, these could easily have been turned into razor sharp weapons. Does this mean that next week I will have to travel topless through the airport? Good thing I have been working out.
Give me 15 minutes and I could rattle off dozens of other, more sinister ways to smuggle weapons on board.
This is a reactionary approach to business.
The current financial situation also demonstrates a reactionary approach to business. Enron has a meltdown. What should we do? Implement ridiculously stringent rules like the Sarbanes-Oxley act. Our financial institutions start to falter. OK, let’s spend $700 billion of the tax payers’ money to sort out the mess.
I’m not saying that these rules and legislation are good or bad (or ugly). That’s a conversation for another time. But I do find it ironic that the “big ideas” always seem to come in response to some tragedy. They are rarely proactive.
What does this have to do with innovation? Everything.
Most organizations use creativity to help them determine what to do next. They brainstorm ideas, select the best solutions, and then implement the most promising ones. Creativity is used to determine what your company or organization will do next.
But in these rapidly changing times, creativity can be equally (if not more) valuable for determining what the marketplace and your competitors will do next. Or, if you are the government, it may help determine what your banks and terrorists will do next.
When is the last time you had a brainstorming session where you asked the following questions?
- What are we most afraid our competition will do to us?
- Who is not a competitor now, but might be in the future?
- What shift might happen in the buying habits of our customers that may make our product/service less appealing?
- How can the sagging economy help our business?
- What emerging products or services may make our business irrelevant?
The list of outside-in questions can be endless – and valuable.
In your next brainstorming session, try the following:
- Brainstorm your own list of questions, building on mine above.
- Determine which ones you want to tackle first.
- Brainstorm, using a variety of creativity techniques, to identify “possible” outcomes.
- For those which are deemed plausible, brainstorm a list of “triggers” for each. These are market conditions that tell you that the given scenario is moving from “possible” to “plausible.”
- Set up a corporate “radar” system to help monitor external conditions. Have everything in place such that you can implement critical ideas when market conditions dictate.
This approach blends creativity with scenario-based planning . It helps you move from reactive solutions to proactive solutions. And in today’s volatile world, this might just be the key to your long-term survival.
P.S. If you want to see where airport security is heading, visit Ryanair’s website. For adults only.
July 30, 2008
While in Asia, I heard a great expression, “Before You Can Multiply, You Must First Learn to Divide.” I now find myself using this saying nearly every day.
The idea is that if you want to grow your business, you must learn to partner with others – and give them a slice. This means you take a smaller slice of a bigger pie.
I have been doing this for a while now with my agent. He takes a percentage of my business in exchange for handling everything from negotiating, contracting, logistics, travel, invoicing, etc. I am convinced I make more money through this arrangement…and work less.
I recently had a conversation with a guy who runs a seminar business. When big name American speakers come to his country, he hosts a public seminar. His biggest challenge is getting butts in seats. When I looked at his business model, it was flawed. He has a lot of fixed costs, like advertising, printing (brochures) and postage. His customer acquisition cost is ridiculously high, and was often hit or miss. He could spend $5,000 on a newspaper advertisement and get only three customers paying $300 each. Even with 50 paying customers, he is still paying a 33% customer acquisition cost – assuming no discounts. My suggestion was to create a model where others make money only when he makes money. One example is to set up an affiliate program where he gives a large commission to people who get him paying customers. This moves his costs from fixed to variable. This removes his risk while encouraging others to take a vested interest in his success.
Yesterday I was at a board meeting for my local National Speakers Association chapter (I was the President last year and am still on the board). Over the last two years we spent a lot of time and money on something we call the “Visibility Initiative.” The idea was to get visibility for our members in order to help them get more gigs. We spent thousands on website development and marketing. If we use the “divide before multiply” concept, it would make more sense to get someone to do all of these activities for us. Speakers bureaus sell speakers to event planners. They already have the connections and already have websites. This is their business. Therefore, if we partner with a bureau (or two), they get their commission for every gig booked and we get greater results with less effort.
When I was on the Donny Deutsch show, a caller asked, “I am the owner of a business. How do I retain my top talent?” Donny asked what percentage of the business he owned. The caller said 100%. Donny’s response was (paraphrasing), “Wrong. As of today you own 80%. Go into the office of your top 10 people and tell them that they are now partners in the business. Give them 2% each. They will have a greater sense of ownership. Besides, this is probably the amount you would have given them as a bonus anyway.”
Where can you multiply by first dividing? Where can you give a slice of your business to someone else? How can you grow your business while creating more income for others?
July 2, 2008
Today I leave for Asia and will be gone for 3 weeks. Before I go, I want to throw out an idea I have been playing with. It’s rough, and I will write more about it soon. The concept is probably most relevant to those in the “intellectual property” business – speakers, trainers, advisers, coaches, and consultants.
I was speaking with a friend who owns a training business. She described a frustration of hers. After doing a day-long training session for a company, she discovered that they were using her materials to train other employees – without paying her any extra money. From her perspective, this was not permitted unless they licensed her content. She also discovered that outside trainers (i.e., competitors) were getting access to her training materials.
This got me thinking about my recent blog entries on companies that are giving away their intellectual property as part of their innovation strategy. GlaxoSmithKline is giving away their cancer cell research, and Nokia is giving away free software.
So, I asked her, “What if you gave away your intellectual property? How would you need to re-invent your business?”
I then drew the following chart to stimulate some conversation. I used getting publicity (PR) as an example during our discussion (written from the viewpoint of the buyer – not the service provider).
The framework depicts three levels of services/products: tell me, enable me, do it for me.
Tell me: These products/services tell you how to do something. If you want PR, you could read a book, take a class, or listen to CDs on the topic. Coaching and traditional advisory-type consulting also fall into this group.
Enable me: These products/services go beyond advice and give you the tools to make things happen. Pricing may be a one-time fee, a subscription, or a pay-as-you-use. [my Innovation Personality Poker is a simple “enable me” tool]. As an example, if you want PR, you could…
- buy a press release writer, software that asks simple questions and spits out a professional press release with hypnotic marketing words embedded. Maybe it could even automatically submit it to PRWeb.com or PRNewsWire.com.
- buy/license an article submitter that sends your articles out to a pre-determined list of article websites.
- subscribe to PRLEADS.com, a subscription service that sends you daily requests from journalists who are looking for experts.
Do it for me: Here the work is actually done for you. You could hire a PR firm to get publicity and you could pay them on retainer (a monthly fee) or better yet, you could pay them on results (they get paid when you get placed).
What is interesting about this model is that as you go to higher levels, the value delivered increases, while the offerings become more difficult to replicate.
I believe that the sweet spot is the “enable me” level. Not only do you increase the value delivered and reduce the replicability, but you also gain leverage because you can build it once and sell it many times.
What if you gave away your intellectual property? What if you gave away your “tell me” content and used it as marketing material? What if your greatest assets were converted into “enable me” products? How would you need to re-invent YOUR business?
Well, I’m off to Asia. In the meantime, I welcome any thoughts or comments on this idea. And if you are in Kuala Lumpur, Bangkok, or Singapore, I hope you will attend one of my presentations.