Your Customers Are Cynics

March 10, 2011

[This article originally appeared on the American Express Open Forum]

A large portion of my business is public speaking. And I know many others who make their living the same way. But to be perfectly frank, companies are often wasting their money when they hire a speaker. I say this not because there aren’t many gifted men and women who can deliver an engaging presentation. The problem is with the customers, not the speakers.

As Oscar Wilde once said, “a cynic knows the cost of everything and the value of nothing.” Using this definition, most buyers are cynics.

The truth of the matter is that your customers do not know what they truly need. And they certainly do not know how to define value.

This creates an opportunity for you to engage your buyers in new ways, generating more value for them… and greater wealth for you.

To test the hypothesis that my customers could not articulate what was valuable to them, several years ago I tried an experiment. I called it “PW3 – Pay What We’re Worth.”

As background, in determining the fees paid to a professional speaker, traditionally the speaker sets the rate before the work is done. With the PW3 experiment, I turned this model upside down. Instead of quoting a standard rate, the client would determine my fee after the work was done.

The plan was to send the client a blank invoice after I gave a speech, and they would pay “what I was worth.”

The only stipulation was that we would have a conversation about value up front. I wanted to learn the value they got from previous speakers. How were the concepts reinforced after the presentation? How were ideas implemented? How was value measured?

What I discovered was that Oscar Wilde was indeed right. Companies were unable to define value, at least in terms of tangible results. In fact, in nearly every situation, when I asked them how they would determine what to pay me after an event, they said, “Um, I guess we’ll pay you what we paid the last speaker.” In fact, with 90 percent of my speeches, the client asked me for my standard fee and just paid that.

How can you create exponential value for your customers? How can you in turn create greater wealth for your organization? Let’s first look at the way organizations tend to operate.

In my work, I have defined three levels of innovation:

Level 1: Innovation as an event
Level 2: Innovation as a process
Level 3: Innovation as a system

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

Three Innovation Distinctions (Part 2): Process Not Events

January 18, 2010

In the first part of this series, I wrote why you should focus on challenges, not ideas. You should read that article before proceeding. [for your convenience, all three articles have been packaged into one pdf file]

In this second entry, I will focus on “Process, not Events.”

I first shared these three distinctions with a bunch of speakers and authors.  In the speaking industry, conferences/conventions are the primary model for professional development.   That is, a bunch of people get together for a few days.  The days are comprised of presenters on the stage who share their “wisdom” with attendees.  When the event is over, the learning ends.  And for most individuals, progress ends.

People who attend these events leave with a laundry list of ideas.  Most people never implement any of the ideas.  They just sit on the shelf in a binder.

This, in a nutshell, is what happens in the innovation programs of many businesses.  They hold ad hoc brainstorming sessions. Or maybe they run a campaign using a crowdsourcing tool.   They develop new ideas.  If they are lucky, those ideas do get implemented. But quite often, the event ends and progress ends.  Regardless, innovation does not happen again until someone has another stroke of inspiration and decides to hold another event.

Innovation in most organizations is episodic.  It is unpredictable.  And it is certainly not repeatable.

But what if you had a systematic way for ensuring that innovation continued long after the event?  What if you didn’t need to wait for divine intervention for your next big idea to sprout?  What if you could make innovation repeatable?  To do this, you want to move from “innovation as an event” to “innovation as a process.”

Back to the authors and speakers…what if, instead of just events, there was a process that helped people see their ideas through to fruition?  What if everyone came to the event with some challenges?  The process could involve regular mentoring or an online community.  There could be measures in place to help monitor progress.  The point is, there is a process to help ensure progress.

In the business world, we have the opportunity to take this process-driven innovation concept a bit further.

For this “event to process” transition to be successful, the first step is to start treating innovation like you would treat any other part of the business. For example, your organization’s finance department has skilled experts, measures, supporting technology (e.g., Oracle or SAP), processes (e.g., processes for closing the books at year end), an owner (the CFO), and a strategy.

The innovation “process” requires all of these elements, and more, including skilled innovation experts (e.g., an innovation center of excellence aka innovation master blackbelts), innovation measures (e.g., return on investment for each idea), innovation management technologies (e.g., InnoCentive’s @Work solution), an innovation process, an innovation “czar” (aka advocate, Chief Innovation Officer, VP Innovation), and a clearly articulated innovation strategy (what you expect to achieve with your innovation program).

I call this level either “innovation as a process” or more accurately, “innovation as a discrete capability.”  You can read more about this in my “Innovation Philosophy” page.

With these fundamentals in place, you can begin to make innovation a repeatable and predictable process whereby creativity is encouraged throughout the organization and the best ideas are implemented.

It’s worth noting that after successfully moving through the process level of innovation, the highest level of innovation is embedded innovation (aka embedded capability or environment). With both the event- and process-driven levels, innovation tends to be reactionary and discrete. It is somewhat separate from the business. With embedded innovation, people not only innovate to deal with “problems/challenges” that are presented to them, but in everything they do. They continuously, even radically, improve their products, processes and organization.

I could write much more on this topic.  In fact I did.  I originally wrote about the three level of innovation in my 2001 book, 24/7 Innovation,” and upgraded the concepts for my “Little Book of BIG Innovation Ideas.”

Look for the third and final installment of this three part series sometime soon.

How To Build Innovation Networks

May 20, 2009

According to David Strom, a web/tech expert…

“Burger King ran a promotion not too long ago where they asked people to defriend 10 Facebook friends in order to get a coupon for a free burger. They were swamped with thousands of requests, thereby establishing the value of a friend at somewhere around a quarter. That is pretty depressing. I always thought a friend was worth at least a couple of bucks, if not more.”

This got me thinking.  How do we value friends?  And are all friends valued the same way? I have nearly 400 Facebook friends.  I try to only befriend people I really know.  But admittedly, some are friends of friends and I don’t know them at all.  In reality, there are only a handful of people that truly interest me.

My experience mimics that suggested in this fascinating article on how the virtual Facebook world mimics the physical world.  Although we may have hundreds of friends on Facebook, there are indeed only a handful that we maintain intimate relationships with.

Dr Robin Dunbar once suggested that humans can only have a stable network of about 150 people, also known as “the Dunbar number.”

The article shares some interesting statistics…

  • The average person has 120 Facebook friends.  This is interestingly quite close to the Dunbar number.
  • Men generally respond to postings of only 7 of those friends by leaving comments on photos, status messages or “the wall”.  Woman respond to 10 friends.
  • With two-way communication, men only chat/email with 4 people, while women communicate with 6.
  • Among those Facebook users with 500 friends, these numbers are only slightly higher (but not proportionally higher). Men leave comments for 17 friends, women for 26. Men communicate with ten, women with 16.

I find this quite interesting.  And it has interesting implications for building innovation networks and communities.

When working with an organization, I often put in place innovation “Centers of Excellence” and “Communities of Practice.” We find these are very helpful in spreading the innovation gospel into smaller, more manageable sized groups.  The research above demonstrates to me why it works so well.

While at Accenture (then Andersen Consulting), we used a similar model to build the skills of the consultants. My area was called “Process Excellence” and involved the building of innovation skills.

We created a Process Excellence Center of Excellence with 100 people.  These uber-experts were dedicated 100% to our team.  We had responsibility for their professional development and the P&L of the group.  We even split these into smaller groups based on geography and specific competencies.  This created even smaller, more cohesive groups.

We then developed a “Community of Practice Leadership Group.”  This group was comprised of 30 people. These individuals were dedicated to other parts of the business (mainly industry programs).  We were only responsible for giving them to tools necessary to lead their communities.  Leaders were selected based on their existing Process Excellence skills and their geography.

Each leader had about 50 people on average, giving us about 1,500 people in the Process Excellence Community of Practice.

At the lowest level, we had 20,000 consultants that were recipients of the training that was developed by the Center of Excellence and delivered by 150 experts hand-selected from the Community of Practice.  These sessions were delivered in small group settings with a dedicated point of contact available for post-training follow-up and mentoring.

Using this approach, we developed a powerful 20,000 person practice in only a matter of months.  Although this group accounted for almost 40% of the consultants in the company, it was one of the most active and sought after communities.

Instead of trying to create huge, faceless groups, look for opportunities to build smaller, more active communities.  Find ways to create intimate relationships between employees, customers, and vendors.

Look at your networks.  Is there an abundance of activity and dialogue?  If not, you may want to look at the sizes of your teams.  Yes, size does matter.

If you have not yet read my article published in the European Business Forum, be sure to read it now.  It gives more insights into this “community” concept.

Innovation 101

October 9, 2008

Although much has been written about innovation, there is little agreement on what it is or why it is necessary. Is innovation the same as creativity? Is it synonymous with product development? Or is innovation just radical change?

I like to describe innovation through an old, yet relevant, joke. The joke begins with two men who are hiking in the mountains of Canada when they stumble upon a hungry 600-pound grizzly bear. Immediately, one of the hikers takes off his backpack and hiking boots and proceeds to put on his running shoes. The other hiker looks at him and asks, “What are you doing? You can’t outrun a bear!” The first hiker responds, “I know, but I only need to outrun you!”

This is innovation. It is not simply about new products, new processes, new services or new ideas. It is about staying one step ahead of your competition.

Why you need innovation now more than ever
Sometimes the “competition” is not another company, but rather socioeconomic shifts. Rising oil prices, a slumping housing market, the collapse of well-known financial institutions, and a looming recession have all left corporate executives on edge.

While many companies are tightening their belts due to unstable market conditions, truly successful companies use these times as a chance to outstrip their competition. My favorite company, Koch Industries, increases their investments during difficult times. They know that if they focus on innovation while others are cutting costs, they will quickly catapult past everyone else. They must be doing something right; Koch Industries has grown seven times faster than the S&P 500 for the past 40 years.

How can innovation benefit your company? It is not just about product development or radical growth. When used properly, innovation can help you achieve the following:

  • Reduce costs
  • Increase service levels to customers
  • Improve overall employee performance and retention
  • De-commoditize a commodity business
  • Become recession-proof

Three levels of innovation

[Read more]