January 18, 2014
An excerpt from my latest Harvard Business Review article…
Every company has a limited amount of time, money, and resources that it can invest in innovation. That’s why they should focus their energies on opportunities that will set them apart from their competition — that is, they should innovate where they differentiate.
One company that does this exceptionally well is USAA, a financial services firm, which offers its services to military personnel and their families. Given the unpredictable and transient nature of the lives of its customer base, USAA knows that being easy to do business with is critical to its success. Its differentiator, in other words, is world-class customer service.
This commitment to service drives the company’s innovation efforts. It developed an app, for example, that allows military members to deposit checks from their cell phones – a major convenience for anyone serving overseas. Although you may enjoy the same convenience with your own bank, you can thank USAA for it. They were the initial developers of this technology and hold the patent for it.
December 18, 2013
Unfortunately, for a small-business owner, this means giving up some level of control.
At the conclusion of the event, an attendee approached me and asked, “So how do you get small-business owners to give up control when this is something they typically don’t want to do?”
Who’s In Charge?
This was an understandable concern. After all, the reasons to maintain control and avoid delegation are plentiful: There’s not enough time. To do it right, you must do it yourself. You enjoy the task.
To a large extent, the desire for control is driven by ego. Let’s face it; you need a bit of an ego to start your own business–it’s certainly not for the faint of heart.
However, there’s another important issue at play here: the “pain/gain” equation. The concept is simple: People first want to eliminate a pain or prevent a loss before they will be interested in generating any kind of gain.
To illustrate, here’s a simple consumer example:
Think about the last mattress commercial you heard. Most say the same thing: “Buy our XYZ bed, and you’ll get your best night’s sleep ever.” Yawn. Boring. Chances are, the commercial will put you to sleep long before you run out to buy the bed.
Now consider this actual radio advertisement. “If your mattress is 10 years old, it weighs twice its original weight due to the dust mites that accumulate over the years.” Ouch! This simple statement creates a pain, and it makes me want to replace my mattress immediately. Let’s face it, pains, whether real or created, drive action.
Pain Vs. Gain
In business, when we focus on overcoming a challenge that’s perceived as a threat, such as unfavorable regulatory changes or unexpected competition, the pain motivates us to eradicate the problem immediately. Conversely, when we focus on overcoming a challenge that’s perceived as an opportunity, we’re less inclined to take action. If you apply this same concept to control, it makes sense why most business owners struggle with relinquishing it.
Most people think about the opportunity or gain associated with giving up control: increased free time, the flexibility to engage in more meaningful activities and the ability to sleep in. It sounds logical. It sounds desirable. Yet this isn’t enough to motivate them give up control.
Why? Because, on the flip side, there’s the pain or threat associated with giving up control: increased errors, reduced quality and upset clients. If people are wired to minimize pain, it makes sense why entrepreneurs are convinced they’re best served by doing everything themselves.
Learning To Let Go
So how can you address this dilemma? One way is to rethink the situation: Don’t think of giving up control as having the opportunity for more free time. Reframe it to focus on the downside or threat of not giving up control. Answer these three questions when you’re considering the pros and cons of giving up control:
- What is the cost associated with not giving up control?
- What will you lose by not giving up control?
- What is the pain that will be created if you don’t give up control?
These questions will help refocus your attention on where it needs to be to create action—on the pain associated with doing everything yourself.
And this technique can be applied to any behavior you may wish to change. By focusing on the cost of not changing it, you’re more likely to take action.
To reframe your view, write down all the costs associated with not giving up control. Create a long list—be creative, but be honest. You have to truly believe in those pains. Keep those pains front and center, and look at them every day. Talk about them with your team. Also discuss how you can minimize the risks associated with delegating work to others.
Only when the perceived pain associated with not giving up control is greater than the pain associated with giving up control will you be able to make a shift.
This article originally appeared on the American Express OPEN Forum - please comment there
November 5, 2013
Imagine you are a company that produces products for consumers. It could be toothpaste or soft drinks. You decide that your differentiator is your marketing. (Read one of my articles on “Innovate Where You Differentiate“)
Given this, you might assume that the marketing department is the most important part of the business.
This assumption would be wrong.
There is no “most important” department in any organization. Each contributes to the differentiator in their own unique way.
To determine how, you need to dig deeper.
What aspects of your marketing sets you apart? Is it really just about your advertising or brand recognition? Or is there more to it?
For example, maybe it’s your scientifically proven marketing claims that set you apart – “Our laundry detergent cleans whites 50% better than the competition.” For marketing to promote these facts, you of course need to have an R&D team that can create these products. Although (in this example) R&D’s primary role is to support the company’s marketing efforts, this does not mean the marketing function is more important. Everyone is equally important. For example, packaging becomes critical for highlighting claims. Product distribution may impact how a package is displayed on the store shelf. Technology that supports the acquisition of intellectual property may play a major role, as will the lawyers who secure the IP.
But maybe your marketing is not about scientific claims but is instead about clever promotions. Your products target a younger demographic. Therefore you create competitions that appeal to these individuals. Product development now shifts from creating the “best” product to potentially one that responds to consumer suggestions (think Mountain Dew flavors created by customers or M&M colors voted on by customers). Manufacturing needs to get in the act of making sure these new flavors/colors can be produced. The technology that runs competitions and sifts through consumer recommendations quickly and efficiently will help facilitate the customization.
Of course, recruiting makes sure you hire the right people for all of these “marketing” roles. Training makes sure that the critical skills are in place. And so on.
The key is to cascade your differentiator down to every individual.
It is critical that you innovate where you differentiate. But differentiation is not a department or function. Each employee in every department directly contributes to your differentiator. In order for them to know how to make the greatest impact, your differentiator needs to be translated in a way that helps individuals prioritize their work.
Innovation is everyone’s job. But everyone should not be innovating everywhere.
November 1, 2013
Imagine that I am holding a glass of water. Here’s a question for you (you know this one)…
What is the difference between a pessimist, and optimistic, an efficiency expert, and an innovator?
The pessimist sees the glass half empty. The optimist sees the glass half full. The efficiency experts says, “There’s too much glass (in other words, fire half the people).” And an innovator asks, “Is someone thirsty? Is there a better way to deliver the water? Is water really the best liquid?”
Innovators ask a lot of questions. They get at what is really needed, not just what is requested.
Most employees are good “soldiers,” doing what they are told to do. They are brilliant at executing and getting things done. Unfortunately, being a good order taker usually means you are not a good innovator.
The issue is, people are not trained to push back. They aren’t skilled in asking questions. They’ve never learned to dig deeper or to understand what is really needed and why.
After a speech, a client executive asked me how she could increase the level of innovation on her team. I told her, train your people to ask better questions. They don’t need to “think outside the box.” It is not about creative solutions. It is making sure each person is working on things that matter.
Sadly, too often, employees (and companies) are focused only on solutions.
So, if you want your people to be more innovative, you need them to ask better questions.
October 28, 2013
According to a recent Huffington Post/YouGov poll 28% of Americans did not read a book last year. As an author, I find this both disappointing and yet not surprising.
Fortunately most people read.
But is what you are reading enhancing your creativity, or just furthering your intellect?
Most people who read for business purposes focus on deepening their expertise. They read books, business magazines, and trade journals about their topic. For example, if you are finance expert, you most likely read primarily about money. The training classes you take are also most likely financially focused. And professionally, you probably hang out with other people in your industry.
Of course this is valuable. Deepening one’s skills is critical.
However, if you want to be even more successful, try broadening your horizons.
I am a professional speaker on the topic of innovation. However, less than 50% of my personal development time is focused on speaking or innovation.
Learning from fellow speakers and innovators can only take me so far. There are countless studies that show that true breakthroughs rarely, if ever, come from the domain experts. In others words, if I want to be the same as other innovators, learning from them is fine. But if I want to be different/better than other innovators, I can’t learn from them.
I recently signed up for a 6 day magic master class. I’m partly interested in it for the performance aspect; it will improve my speaking skills. Most good magicians do an amazing job at holding the attention of an audience. I am also interested in magic from the “brain science” perspective. Magic exploits various quirks of the brain, and I believe that understanding these helps me be a better innovator. Magic is about making the impossible possible. Let’s face it, most innovation programs have difficulty making the possible possible.
Although I read Harvard Business Review, I spend even more time reading magazines about the brain/neuroscience (e.g., “Scientific American Mind” magazine), psychology, and sports performance. I learn from entrepreneurs who are not involved in either speaking or innovation. And for pleasure, I read mysteries as they seem to strengthen my problem solving abilities.
None of these topics were chosen at random.
In addition to being topics I enjoy, they are what I call “purposeful tangents.” They are related to my areas of expertise, but they not the same.
Do you work in the gas pipeline industry? Learning from others in that field can of course be valuable. But you may gain breakthrough level insights from cardiovascular experts as they too deal with the movement of fluids through a vessel. In fact, there is a group in Houston called Pumps & Pipes; cardiologists and gas pipeline experts who share insights from their respective fields. These are purposeful tangents. They are related.
What are your purposeful tangents? What could you read/study that is similar to your area of expertise, but different?
Of course there are valuable lessons to be learned anywhere. But looking for insights in random places may lead to random value. It is less predictable and may dissipate your energies.
But again, focusing too much on your area of expertise only leads to incremental improvements.
Purposeful tangents can lead to breakthrough learning with a high level of predictability.
October 11, 2013
Imagine two groups of problems solvers.
Group #1 is homogeneous. That is, everyone has similar personalities and areas of expertise.
Group #2 is diverse and comprises a blend of different styles and experiences.
Which group will perform better?
In times of crisis and on simpler tasks, Group #1 will always perform better. They “speak the same language” and therefore get things done quickly. Their solutions may not be as creative, but they will be more likely to coalesce.
But what about in less time-sensitive situations or more complex tasks?
According to research and my own experience, Group #2 will still – left to their own devices – underperform.
Although diverse groups may attempt a wider and more creative range of solutions, the differing perspectives can lead to harmful disagreement. For example, someone throws out what they think is a great idea, but it quickly gets shot down by someone who has had different experiences. In this instance, it might be creativity going in a head-to-head battle with practicality.
Diversity doesn’t work naturally. It requires one key ingredient: appreciation.
Our studies find that when diverse teams are given the tools to appreciate one another, they generate solutions with higher value and have a better chance of implementing them.
I’ve found that for diverse teams to work well, each person on the team needs to:
- recognize that opposites do not attract (they repel) and therefore it is natural to avoid or disagree with those who are different
- be aware of his or her limitations (each style has positive and negative implications)
- discover where he or she contributes and detracts in the innovation process (everyone can’t do everything well; certain part of the process are handled by some better than others)
- appreciate how others complement his or her limitations (each person provides different forms of value and “completes” you)
So yes, diversity can work. But it is not a natural act.
Anyone who says that opposites attract has not been paying attention to the bickering on Capitol Hill.
But opposites can collaborate effectively when everyone appreciates the contributions of those with different perspectives, styles, and experiences.
P.P.S. Personality Poker is designed to enable diverse teams to work effectively together. Learn more about this card-based system, book, and keynote speech.
October 1, 2013
I was recently interviewed by Pedro De Abreu for an article on Virgin.com. Here’s a little taste…
Every web site we visit, every book we read, every conference we attend, we are admonished to innovate, to be innovative and to disrupt the market with innovation. Stephen Shapiro, author of the international best-selling business book ‘Best Practices Are Stupid: 40 Ways to Out Innovate the Competition’, makes the case that instead of listening to all the noise, we should ignore all advice (including the ones he gives us in this interview).
What is innovation?
Innovation is an organization’s ability to adapt, evolve, and change repeatedly and rapidly. Although new products, services, and business models all play into this, they are a means to an end: to stay at least one-step ahead of the competition.
How can companies and individuals become innovative in their approaches to life and business?
Too often in life (and business) we have this false belief that we can predict the future. At a personal level, we set goals for many years out, hoping to achieve them using a well thought out plan of attack. But the flaw in this thinking is three-fold. 1) Our past is so limited that we really can never know what is the “best” future for us. 2) We can never predict the best path, as there are too many factors in the real world. 3) The world is changing fast, so a 5-year strategic plan is (in many cases) useless.
Instead, I suggest that you “use a compass, not a map.” Instead of a specific destination, you have a general direction. Then you “meander with purpose.” Learn by doing. Learn by experiencing. Adjust directions frequently, but still move in the same direction. To me, this is the ultimate in innovation living.
What the five rules of innovation that companies and individuals should stick by?
1. Innovate where you differentiate. Most organizations dissipate their energies by not focusing on the opportunities to set yourself apart from the competition. This should trickle down to every department and person. For any activity that is not a differentiator, you should optimize, automate, outsource, replicate or partner with others.
September 20, 2013
In life and in business, we are often told, “don’t bring me problems, bring me solutions.”
From my perspective, this is bad advice. I want people to bring me bigger and better problems.
Or, as the fortune cookie I got last night (above) implied, if you don’t focus on the right question, the answers/solutions may be useless.
Unfortunately, most people continue to work on solutions to problems that don’t matter.
Here are some questions that will help you prioritize your thinking:
- Are you focused on what is important…or on what is urgent? Many people are “firefighting arsonists,” creating urgency in everything, even if it is not critical. A short-term mentality prevails. Make time for the important investments that will pay long-term dividends.
- Are you investing energy on activities that provide exponential returns…or linear returns? Most people rarely look for what gives them leverage. Look for partners and business models that enable you to scale your solutions.
- Are you working on what you actually can change/influence…or on what you wish could be changed? Not everything can be changed. Just because you are frustrated does not mean you should try to fix something. Trying to change others, for example, is a losing proposition. Instead change your attitude towards them.
- Do you appreciate the differences in others that complement you…or on the differences that annoy you? Contrary to conventional wisdom, opposites do not attract. We tend to focus on what we don’t like in others, instead of seeing how those attributes might actually be beneficial to us. But diversity, when viewed through the right lens, can be extremely valuable.
- Do you develop solutions that the world will value…or what you value? Some of my artist friends don’t want to “sell out.” Basically this means that they don’t want to create what others want and would rather do what they want…and remain poor.
Too often we invest our time, money, and energy (including mental energy) on things that don’t really matter or don’t produce real results.
By asking a different question you will always get a different answer. By refocusing and reframing, you can do less while getting better results.
September 16, 2013
Last week Apple announced their new lineup of iPhones: the 5S and the 5C. In the subsequent days, their stock dropped like the apple that fell from a tree and hit Newton on the head.
Why? Most analysts were expecting a lower priced 5C so that it could be competitive in China. At the price it is being offered (over $700 for an unlocked phone), most feel it is too expensive.
Was this a misstep by Apple?
My gut tells me that there was a fair amount of thought that went into this pricing decision. And it may actually work out better than people expect.
By keeping the price a little higher, Apple remains a premium brand. If they created a truly inexpensive phone, it may have cheapen their brand.
But there is a psychological factor at play here, which many consultants know well.
When preparing a proposal for services, it is common for a consultant to provide 3 options. A low cost, bare bones option. A middle option. And a high priced, throw in the kitchen sink option. The middle option is designed to be the one the consultant actually wants to sell.
Most people, when given three options like this, gravitate towards the middle one, avoiding the low cost option, but not wanting to invest (unless they are flush with cash) in the most expensive option.
In the past, consumers in China had three options: a bare bones phone (low cost option), an “inexpensive” smart phone (middle option), or the iPhone (high priced option).
Is it possible, that people will now view the 5C as the middle option? Will the inexpensive smart phones (e.g., Samsung) becoming the low cost option?
Only time will tell us is the 5C and its pricing strategy is a smart one.
September 12, 2013
In Best Practices are Stupid, I discuss the need to “innovate where you differentiate.” That is, discover what you do better than everyone else and rally all of your innovation efforts around that.
In the book I discuss one company that does this well – USAA. They provide financial services to families of the military. For them, their differentiator is clear: they serve those who serve our country. In other words, customer service.
Today I saw confirmation that indeed USAA is innovating where they differentiate. They were #1 and #2 in customer service rankings according to the 2013 Temkin Customer Service Ratings. Congratulations USAA.
What about you?
- Where do you differentiate?
- On which list would you be #1?
- Does everyone in your organization have a clear understanding of this differentiator?
- Is this used to prioritize your innovation efforts?