Predicting the Next Meltdown

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.

Reactionary Innovation

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.

Predictive Innovation

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.

Before You Can Multiply, You Must First Learn to Divide

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?

What Can You Give Away for Free?

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.

Nokia Giving Away Software for Free

Yesterday I mentioned that GlaxoSmithKline is giving away a small fortune’s worth of cancer research.  The idea is to speed up the process.

Yesterday, Nokia announced that it will spend nearly a half billion dollars to buy a software consortium – so that it can give away the software for free.  Symbian, one of the leading software developers for high-end mobile phones, is the platform for Nokia phones.  By offering the software at no cost, Nokia hopes to increase Symbian’s market share, to increase the pace of software development by third parties, and to decrease its own software licensing fees.

According to the article, “While more than 90 percent of PCs run Windows, the market for cell-phone software is much more fragmented, with a dozen competing platforms. That means software developers have a much harder time creating applications, and raises costs for handset manufacturers and carriers that have to deal with many different systems.”

Symbian will continue to be run as a multi-company foundation, addressing the concerns that it might eventually become a monopoly like Microsoft.

What can you give away to others – suppliers, researchers, competitors – that will enable you to increase innovation at a lower cost?

Open Source Innovation vs Open Innovation

I discussed Open Innovation many times in this blog.  The other day, GlaxoSmithKline announced that they are collaborating with the National Cancer Institute to make a “large body of cancer cell genomic data available to all cancer researchers.” This feels more like “Open Source” Innovation.

Much like Open Source Software, GSK has turned over a small fortune’s worth of information to the research community – for free.

Assuming that that the findings of the community are made public (the open source philosophy), this would almost certainly accelerate cancer research exponentially.  Each researcher could build on the ideas of others.

Most research groups are small organizations who do not have the capacity (or desire) to develop drugs.  Therefore, when breakthroughs are discovered, GSK can step back in and capitalize on the finding of the research community.  This will surely decrease their drug development times and costs.

I do wonder how they are handling intellectual property ownership issues that might emerge.  Stay tuned!

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