Ethics as Business Startegy

Ethics and business goals usually find it difficult to find a common ground. Though every business maintains that they follow all ethics, but then so we really believe them? Even if it is a perception, it is so well set that it is a big challenge for the businesses to undo it.

Paul Sloane in his post Use Your Ethics to Drive Your Innovation gives examples of businesses that took that route. He talks about Volvo that did not patent a seat belt design so that the customers can get the benefit of their new design in any car and not just their cars. I loved his example of Pantagonia – where the company did not want their customers to buy more than it is needed. I loved this example. To me the solution to the problem is consume what is needed and not what is available. Body Shop’s example is better known.

After reading this article, I tried hard to think of businesses in India, specially in this age, if there are any who could fall in this category. I know once upon a time Tata Group of companies had that reputation, but I am nit sure if that still holds good. Infosys created that perception and used that as a PR tool for a long time, but that was another time. I remember I was working for them when a business magazine survey put them as No 1 employer. When I looked at the fine print – in employee perception they were in mid 30s or 40s. So except their own employees everyone else thought they were best employees. But then this may be the case of being too close to the company, you never know there may be similar stories hidden in the above mentioned examples as well.

I remember reading about a software product company, based somewhere in Europe that said – we do not want to grow mindlessly. We are about 100 employees at the moment and we are doing just fine. All of us have enough money to live well and we can do this exciting work for the rest of our lives. I just can not recall the name of the company, but from an employee perspective, that is what should keep you very happy. Do what you are doing without a constant pressure to grow more and more – for no reason. Like they say ‘ Growth for the sake of growth is what the cancer cells do’.

If you can think of a company that uses ethics as part of its strategy, let me know….

Strategy & Innovation

Jeff Dyer & Nathan Furr in their HBR blog To Make Money with Digital, Be an Innovator – Not a Strategist mention how Innovation works and strategy does always in the digital world. They give an three types of situations where the strategy has failed and innovation worked.

  1. Replicating what you did before
  2. Build it they will come
  3. Thinking the Sale is a Finish Line

I think as of today a big differentiator between digital and non-digital companies is the legacy and past experience. Even if both these types of companies are in same business the enterprise-customer relationship in the digital world are still evolving. As I mention in my book The Mouse Charmers – Digital Pioneers of India, the new age businesses are being co-created with the customers. Customers are yet to develop tastes and preferences for the digital world. They are also experiencing the new ways of getting products and services at their fingertips for the first time. To begin with they do not know if they would like it or not – it is only after using do they start developing additional needs and requirements. This required companies to work very closely with them – to interact with them. Companies need to do some macro experiments and then fine tune the successful ones at a micro level. So the role of strategy is almost negligible here. What takes centre stage is the experimentation and the ability to be persistent and patient with them.

On the second point I totally agree with the authors. I have come across many startups who are so much in love with their idea that they forget that the business can exist only is someone other than themselves falls in love with their idea, and for that you have to be in touch with this someone and build your product and service for them. You have to constantly ask them if they like what you are building, you have to ask them to test it for you, you have to ask for the staunchest criticism. On the third point, again agree that in the day and age of big data that is yet to be used successfully in a big way, sale is just the beginning of your relationship with your customers. You need to keep them engaged and happy because online it is far easier to loose the customer – the click away is as easy as the click in.

Strategy has an angle of history that does not exist for most digital enterprises – at least not as of now.

Platter of Chief Innovation Officer

In his HBR Blog A Chief Innovation Officer’s Actual Responsibilities, Alessandro Di Fiore talks about 7 different activities that an Innovation leader needs to do or the areas they need to focus on. Towards the end they have given a web diagram with couple of examples of how Innovation leaders can both evaluate themselves on these parameters and may be define their priorities for the next one year or so.

I quite like their set of the responsibilities – it is a good mix of supporting the current system and evolving a new one. For example when they say ‘Running Idea Generation’ platforms they are talking about a platform that can be used for finding solutions to current problems as well for generating ideas for the future. Sometimes Innovation programs tend to be too isolated from the current business reality and that kind of limits their impact. If you help people with your tools to solve their existing problems, you can invite them to use the same tools to solve the future or anticipated problems too.

Similarly, sheltering promising projects is very important. There are many dangers and obstacles that promising projects have to go through, the biggest being internal skepticism. Then there might be failures that may not be easy to explain, there would be low phases when the team itself would like to give up and there may be environmental changes that may need to be accommodated. All these phases would need a strong leader to keep the vision intact to prevent the projects from dying.

For developing skills I would assume nurturing skills and letting people hone their own skills is more important than training. I believe what you can be taught is limited but what you can learn in virtually unlimited or infinite. Somehow corporate world in last couple of decades has paid a lot of attention to training and not necessarily learning. For a team to be innovative, it is the ability to learn all the time that is crucial.

If you are an Innovation leader in your organization / society, so test yourself on the web diagram – where you stand and it should help you choose where you should be.

Invisible Innovation

In his popular TED Video of Prof Nirmalya Kumar talks about making India as Innovation hub. He brings out how the Indians and the Indian centers of global organizations are working on cutting edge innovations. These innovations may not pass as Indian Innovations, but the contribution of Indians can not be undermined. Add to it the innovations that are being done right here on Indian soil. He talks about Innovation labs in silicon valley being headed by Indians who have been educated in India. He talks about Innovations happening in India centers of the large multi-national corporations. Then, why don’t see se India on the Global Innovation Map?

He brings out an important distinction between Visible & Invisible Innovation – i.e. Innovation that the end user can touch and feel and the whole set of Innovations that go behind the scenes to make the visible innovation happen. Later outnumber the former by many times. Invisible innovations happen in labs and may not directly reach the marketing outreach programs of the final product. He puts Invisible Innovations into four categories

  1. Business Innovations
  2. Outsourcing Innovations
  3. Process Innovations
  4. Management Innovations

While sometimes the boundaries of these may blend, but it is important to understand that lot of so called ‘innovation’ is being done right here that this is not limited to only IT companies, other industries like Pharmaceuticals etc also are a part of it.

It is important that people like him bring these out as this is not evident intuitively.

Some questions that I have:

  1. Do we have to be Innovative as it is seen by the west?
  2. Do we have to be innovative for the sake of being innovative?
  3. Should Innovations not be in response to the needs?
  4. Is it more important to be known for Innovation or to be able to solve problems as and when they occur – that ability to be able to think as the circumstances demand?

Share your thoughts.

 

Internet of Things

H James Wilson’s HBR Blog Make the Internet of Things More Human-Friendly triggered me to write what I have been thinking off, of late. The need to usher in the age of synthesis after we have done enough analysis. I will focus on the first point in the article that the things need to talk to each other rather than the user talking individually to them and synchronizing his or her actions for them. While the author makes a case for making devices talk to each other and release a lot of mental bandwidth of the user free, I take this argument further and say that our engineers, designers and creators need to start thinking in a way that synthesis things rather than analysing them.

When our thinking is based on synthesis, we link multiple things rather than breaking them up into smaller pieces.We study the impact of each of the actions on other things in the vicinity and on human being who will use it. As we keep increasing the impact of synthesis, we would be able to see the impact of our innovations on a larger set of people and on more number of things as opposed to the analysis approach that makes us think narrower and narrower. By thinking about the impact of our work beyond the first touch point, we would be able to fine tune our work so that it works for a larger set of people or larger set of problems.

People would say that you need a combination of divergent and convergent thinking, which works well for problem solving scenarios. For next generation innovations we would need to think in terms of how the things impact each other, how each action reverberates through the eco-system.

In the coming days, ability to synthesize ideas from various verticals would gain currency as our current generations are quite used to thinking in terms of breaking the problem.

Balancing Innovation Rewards

There is enough literature on Incentivizing employees to be innovative. The often quoted examples of Google and 3M giving a percentage of work time to employees for their free will is also seen a productive way to incentivize. Lesser mortals end up announcing schemes where at the end of the funnel there is a tangible reward. Sometimes these are even cash awards for the best idea – remember not the best implemented idea but the best suggestion. There are two opposite views to incentives and an organization must balance the two to achieve a usable result.

Most established big organizations tend to push people to work within the boundaries of their well laid out systems and processes. This brings in a kind of complacent behavior that tells people that they need not think and all they have to do is adhere to systems and produce what is expected. Over a period of time thinking is seen as someone else, mostly top management’s job. To get people out of this, to make them think creatively and to tell them that it is even expected of them needs an incentive scheme – something that would lure them to work over and above the base expectations.

On the other hand, incentives should not become an end in themselves where people will work just enough to get those rewards and then go back to their work. There would be some activity but overall it may not help the organization move ahead as people never saw that as the goal. Incentive initiatives should have a clear goal – if it is an HR exercise to motivate people or a strategic move to use the collective brain power available to the organization. For the later, the whole exercise must not end at rewarding the winners but it should actually start from that point onwards by implementing those ideas and drawing benefits from there.

Incentives should also not be limited to organization level as that would only let people compete within organization, the design of initiative should encourage them to compete with the best in the industry if not exceed the benchmarks already set. This is when you and hence the employees will truly benefit from an innovation initiative. Not many companies think through these angles when they announce idea contests.

Mass producing Digital Startups

Paul Sloane in his latest newsletter article An Industrial Process for Driving Innovation and Start-Ups talks about Y Combinator – a seed fund and startup accelerator. To their credit they have companies like  ScribdStriperedditAirbnbDropboxand Disqus in their portfolio.  YC start-ups have been bought by Google,  Facebook and Twitter. Dropbox is one of their best offspring. It is a cloud based file storage service valued at $4B. YC’s founder, Paul Graham distributes his capital and risk by  putting a small amount of money into a large number of companies. He calls it classic mass-production techniques. Funded entrepreneurs are provide with  counseling, support, connections in twice yearly programs. Graham believes that the biggest mistake start-ups make is building something interesting rather than something that people really need. Focus on something people need. 

I found this concept of supporting big number of small entrepreneurs very interesting. We need more Y Combinators.

Innovation lessons from Toyota & YouTube

Michael Schrage in his HBR article Innovating the Toyota, and YouTube, Way talks about a common Innovation lesson that Toyota and Youtube hold. Now on the face of it these two are very different companies, in different industries and belong to a different generation altogether, so what is the common lesson that they have.

They both thrive on the innovation skills of their suppliers who in turn fuel their growth. Toyota enabled its partners to build scale that led to a scale for themselves, while youtube creates space for content creators and the content thus generator becomes an asset for them to grow. In both their cases, they create a loose space for their supplier or partners to innovate and benefit the whole supply chain.

I think this is a good thought, a thought that comes from thinking from an eco-system or environmental perspective rather than just around yourself. Sometimes companies tend to focus too much on their own growth and profits without realizing that it in turn depends on the growth of someone else and contributes to the growth of another set of people – the customers.  This chain continues in the sense the suppliers must feel the same for their suppliers and customers for their customers eventually thinking growth for everyone in the chain. Sounds philosophical but can be very practical, worth thinking about at least.

Agility & Innovation

In the Strategy & Business article The Agility Factor, authors make a case that agile organizations are more profitable. They explore this concept to present how the agility helps the organizations to respond faster to the changing environments – internal or external through the flexibility in the system. Agility can also be interpreted as ability to innovate as and when the opportunity presents itself, it means the flexibility in the systems, processes and more importantly the culture of the organization to be able to re-invent or re-adjust itself to tap on new opportunities or respond to new threats in the market.

Authors give 4 primary components of being agile:

  1. Dynamic Strategy i.e. a strategy that is not rigid and can be changed on the go as required. There is also a component of strategy being transparent to all employees, that helps it in being flexible, as people know what it is and why it needs to be changed.
  2. Perceiving Environmental Change requires the built in sensors that can sense the changes in the environment as early as possible. This requires that some part of organization has strong ears that is always listening to the waves outside. There should be mechanism to analyze these changes to see how and where they impact the organization, and what is the best possible response to it.
  3. Testing Responses – This is where the innovation engine comes in picture. As soon as an opportunity is identified, you need to find or create solutions, test them, fine tune them and after the required iterations launch them in the market for the customers to use them.
  4. Implementing Change – My interpretation of this would be mainstreaming the new solutions, inducting it in your product portfolio and making it a standard offering.

I quite like their breaking down of this agility factor, this can help organizations identify what parts exist in their system and what need to be inducted or improved. Examples given are also very robust and appropriate.

 

Can doing less lead to more?

Mathew E May in his S&B article Six Secrets to Doing Less focusses on an important issues of how to let go of what is not needed and may be eating up your energy and resources. He starts by quoting Jim Collin “A great piece of art is composed not just of what is in the final piece, but equally important, what is not.” This in a way sums up how removing the unnecessary can lend beauty to the creation and in our case Innovation. He mentions 6 things that can be done to do less along with fitting examples:

  1. What isn’t there can often trump what is.
  2. The simplest rules create the most effective experience.
  3. Limiting information engages the imagination.
  4. Creativity thrives under intelligent constraints.
  5. Break is the important part of breakthrough.
  6. Doing something isn’t always better than doing nothing.
I want to focus on the 3rd and 4th point – which says put boundaries, put limits and then play within those limits and puts it beautifully by saying frame is an important part of the picture. Here I am reminded of Sheena Iyenger’s Book Art of Choosing, where she mentions something in the context of no of choices that we enjoy. Based on many experiments, she says that we all like to have choices, we do not want things to be forced upon us, but given unlimited choices we can get lost and loose interest in the product. Take an example of a coffee shop that keeps on giving you the options and you need to answer 20 odd questions before you can place an order for a humble cup for refreshment. And look at the sprawling tea stalls across the roads that do not give you any choice unless you force them to make a special variant for you. Sheena says for the choices to be effective, the number of choices available should be limited.  The same can be applied to putting limitations and applying boundaries to innovation initiatives. Letting them be as open as possible seems romantic but is hardly practical and can lead to losses like loss of enthusiasm, time, resources and trust.
5th and 6th point can again be combined to say that you should let your mind stray away from the problem and not work on it constantly, taking a regular break and sometimes doing nothing can re-charge the batteries.