TIMnovate

Wikinomics: How Mass Collaboration Changes Everything, by Don Tapscott and Anthony D. Williams, December 2006. This book explores how some companies in the early 21st century have used mass collaboration (also called peer production) and open-source technology such as wikis to be successful.

Strategy guru Gary Hamel constantly warns us that it is not competitors’ product or service innovations that can ruin our businesses, but rather business model innovations. A new business model can quickly make our entire business irrelevant.

In a previous blog, I wrote about the ‘wiki society.’ (From Wacky to Wiki – Jan. 4).  The wiki society apparently has come to business. In this fascinating book, Tapscott and Williams show how companies expand the borders of their business to include their clients and customers, as active and creative members of their innovation system. 

Wikinomics includes some really insightful economics. They site Coase’s Law:

A firm will tend to expand until the cost of organizing an extra transaction within the firm become equal to the costs of carrying out the same transaction on the open market.

In the wiki society, the Law is inverted, the authors believe:

A firm will tend to expand until the cost of carrying out an extra transaction on the open market become equal to the costs of organizing the same transaction within the firm.

What they mean is that with the cost of communication and networking dropping rapidly, what was done outside the firm can now be done more cheaply by the wiki principle: organizing communities of users and clients, and expanding the borders of the firm. Recall Gary Hamel’s 4-box theory of strategy, which included “configuration,” or what the company does internally and what it does externally, linking its core strategy with its strategic resources.   Suddenly, with the wiki (user community), the borders of the firm expand dramatically. And the core strategy must change equally dramatically.

Has your business created a wiki? If not, can you? How? What will its goals be?  

If you have not begun to grapple with these questions, it is already very late.

Innovation is not just about services, products and processes. Ultimately, it is about how we organize our society. The collapse of global capital markets in 2007-8 has generated a need to rethink and innovate our economic and social organization. But how? 

The form of “capitalism” embraced by the world in the past two decades spun out of control. One reason is that it was controlled by a tiny handful of greedy individuals who acquired billions in wealth and who invested our money recklessly, without our knowledge.  

That system has crashed and burned. Good riddance. The system, both in Israel and abroad, was not truly capitalist.  Capitalism in its purest form is about creating value for others, not about grasping short-term high-risk profits for ourselves.

I recently took part in a panel on the global crisis. Next to me sat Florence Devouard, a founding member of the Wiki foundation, which runs and funds Wikipedia.  

As panel participants dripped gloom, and offered analyses of problems but no solutions, I turned to Florence and asked:  

Can we rebuild the system as a wiki? 

Yes, of course! she responded.

A wiki society is one based on the following principles. Individuals commit themselves to helping daily friends, neighbors and strangers who have less than them. We accept personal responsibility for each other’s wellbeing and do not expect government to help much. We do this especially in our neighborhoods, to rebuild our sense of community. We each volunteer daily non-random acts of kindness. We receive as well as give. We do this with minimal organization and zero bureaucracy, using Internet technology for communication and coordination.  Indeed, as NGO’s (nongovernmental organizations) blossom daily, a kind of wiki society is being born as we speak. 

In the panel, Giora Yaron, a brilliant and successful entrepreneur, responded to my wiki society idea by calling me “my friend from HaShomer HaTzair” (a left-wing youth group). He meant that the wiki society idea was hopelessly idealistic and utterly socialist.

I laughed and remembered that in the American presidential campaign, when candidate Barack Obama suggested slashing taxes on the middle class, Republican John McCain called him a ‘socialist.’   

What a huge misunderstanding! Socialism means relying on the government for everything. In the wiki society, we rely only on each other, and on innate human goodness, energy, generosity and initiative. 

We now understand world  markets were whacky. It is time we turned ‘whacky’ into ‘wiki.’

In 1972 psychiatrist Irving Janis published a fine book, titled Victims of Groupthink (Boston. Houghton Mifflin Company). Janis used ‘groupthink’ to describe the dynamic that afflicted the Kennedy administration when the president and a close-knit band of advisers authorized the ill-fated Bay of Pigs invasion in Cuba in 1961. The president’s view was that the Cuban people would greet the American-backed invaders as liberators who would replace Castro’s dictatorship with democracy. His advisors ‘heard’ only reports that confirmed this view. The result was a disastrous wrong decision to invade Cuba.

Formally, “groupthink”  is defined as a type of thought exhibited by group members who try to minimize conflict and reach consensus without critically testing, analyzing, and evaluating ideas. Individual creativity, uniqueness, and independent thinking are lost in the pursuit of group cohesiveness, as are the advantages of reasonable balance in choice and thought that might normally be obtained by making decisions as a group. During groupthink, members of the group avoid promoting viewpoints outside the comfort zone of consensus thinking. Groupthink may cause groups to make hasty, irrational decisions, where individual doubts are set aside, for fear of upsetting the group’s balance.

Avoiding groupthink is absolutely crucial when teams engage in innovation. There exists a difficult inherent paradox. Teams strive for intense smooth collaborative interaction. Often, friction, disagreement and contentiousness are frowned upon. Yet, when consensus is sought too quickly and too single-mindedly, the creative juices arising from fierce debate and conflict evaporate. 

Ask yourself: In your teams, and in your organization, is there a strong groupthink mindset? What are the inherent dangers? Has groupthink led to bad decisions in the past? 

How can you dispel groupthink by encouraging dissent, without ruining teamwork and cohesion?

In this, as in other areas of innovation and creativity, there are no pat answers. Each manager must find his or her own solution.

One approach used successfully at TIM is scenario planning. By encouraging team members to develop alternate, different scenarios,  the groupthink tendency to zero in on a single forecast can be avoided.

Some of you may be considering preparing a list of New Year’s resolutions.

Here is a suggestion. Rather than do a conventional list, most of which we fail to implement, why not do the following:

Ask yourself: What is the one thing in my life, as I currently live it, that I can take away (remove, do away with, eliminate), that will make a substantial, significant improvement in the quality of my life? What one thing will make me happier, if I can dump it?

Here are a few suggestions.

Access: Some years ago, I lost my cell phone (it was actually stolen by some painters, when we repainted our house). I found that not having a cell phone was a ‘subtraction’ that vastly improved my life, because suddenly I was transformed from being a ‘public good’ accessible to all, at all times, to a ‘private good’ able to better control access to my time and attention. I never replaced it. 

Smoking: nothing can improve your life and health more than quitting, if you smoke. There are many aids that can help. At the least, cut your cigarette consumption in half. Life is so wonderful, why shorten it by actions that you yourself control? 

Stuff: Do we really become happier by acquiring growing amounts of stuff, bought in forlorn visits to crowded shopping centers populated by equally forlorn people seeking happiness futilely by buying more and more unnecessary stuff?   

GDP: Our son, a ‘green advocate involved with plans for building ecologically-sustainable houses,  insists on buying and using used articles (when available) rather than buying new things and using up scarce resources. Of course, in doing this, he is reducing the Gross Domestic Product. Will, one day, the world shift to a vision and goal of ‘less GDP’ rather than the constant drive to grow GDP,  so that we can sustain our existence on this planet?

Time: Apart from our relationships with friends and family, time is our most valuable asset. And we squander it as if it had no value. I have stopped attending meetings, wherever possible, finding them frustrating and unproductive. The saving is twofold: Valuable time, and valuable mental energy saved from dissipation in endless, futile meetings that go nowhere and achieve nothing.   

So, as you make your New Year’s Resolutions, try this new approach.

Ask, what one thing can I remove from my life, that will greatly improve it?

And, why not do this now?

Picasso

In John Maeda’s book, the first of his 10 “Simplicity” laws is “Reduction.” Israel-based SIT Systematic Inventive Thinking teaches that ‘subtraction’ (removing features from products) can be a powerful tool for innovation, when most of us try to practice ‘addition’ (adding new features on). 

Here is an interesting example, found in a bank not generally noted for innovation.

Israel’s Bank Leumi will open an exhibition this very evening titled “Secret Art.” The 250 works of art are all unsigned. They carry price tags of  NIS 2,000, NIS 4,000, NIS 6,000 and NIS 8,000. The money from each work that is purchased goes to the artist. 

Generally, we assume that the name of the artist is an inseparable part of the work of art itself. Obviously we need to know who the artist is. And generally, the name, as a brand, strongly affects the market price. 

But why? Why not remove the name, and let people judge based on the work itself? Why not subtract something assumed to be highly essential – and see what happens? 

If you live in Tel Aviv, you can view the exhibition until Jan. 2 at the Leumi Mani building, on 34 Yehuda HaLevi St.

Few agencies are as technologically advanced as America’s NASA… National Aeronautical and Space Agency. Nonetheless, they need our help.

Their rubber duckies are missing.

Can you help?

A while ago, NASA researchers dropped 90 rubber duckies onto a Greenland glacier, in an effort to trace where the glacier melt water went, as it disappeared under Greenland’s ice shelf. 

The duckies disappeared without a trace.

If you have seen them, please – inform NASA. They want their duckies back.

Woody Allen once said that his wife was very immature. She sank his rubber duckies in the bathtub.  

NASA is very mature. And the rubber duckie experiment is very serious. So if you chuckled, please! Get serious. Help us find those duckies. The world’s climate is at stake.

A recent segment on the CBS network program 60 Minutes focused on brain-computer interface. It was utterly amazing.

A neuro-scientist named Scott Mackler suffering from an awful disease known as ALS (amyotrophic lateral syndrome, also known as Lou Gehrig’s Disease, after the Jewish New York Yankees baseball star who died from it) was completely paralyzed, except for eye movements. He was shown using only his brain waves (hooked up to an electro-encephelogram (EEG) contraption that read tiny electronic signals fired by neurons in his brain) to answer the interviewer’s questions. By thinking of individual letters, and then thinking “yes” when the computer flashed them on the screen, the ALS  sufferer composed responses to the interviewer’s questions. Then, the interviewer himself Scott Pelley put on the EEG cap – and remarkably, managed to write the word THOUGHT on the computer screen with only his thoughts – and with no errors!

The segment showed Cathy Hutchinson, paralyed completely by stroke, who used a system called Braingate to guide a mouse cursor on a computer screen solely with her brain waves! Cathy can control an electric wheelchair with her thoughts, too.  

And finally, University of Pennsylvania researchers showed how they had implanted electrodes in the brain of a monkey, who had learned how to control a robotic arm with only his thoughts and use it to place food in his mouth. 

Someday, perhaps soon, those with paralysis or who have lost limbs may be able to move bionic limbs with only their thoughts. 

Brain-computer interface

(source: Business Week, Dec. 18, 2008)

1. The Back of the Napkin: Solving Problems and Selling Ideas with Pictures
Author: Dan Roam
Publisher: Penguin Portfolio

Roam teaches doodling techniques to executives at companies such as Microsoft, Google, and Wal-Mart. He argues that drawing simple pictures and diagrams to express ideas forces executives to be clear when communicating inventive new concepts. And he presents convincing examples of powerful, hand-drawn timelines, caricatures, and pie charts.

2. Closing the Innovation Gap: Reigniting the Spark of Creativity in a Global Economy
Author: Judy Estrin
Publisher: McGraw-Hill Books

Serial entrepreneur and former chief technology officer of Cisco Systems, Judy Estrin expands on why the U.S. position in the world has eroded in comparison with those of such emerging powers as China and India—and what government and business can do to redress the deficit. Her core arguments are that many executives have a penchant for short-sighted investments, and that cowed corporate boards are unwilling to ask hard questions. Estrin also takes government to task for scaling back non-defense-related spending on science, causing some American innovation muscle to atrophy.

3. Disrupting Class: How Disruptive Innovation Will Change the Way the World Learns
Authors: Clayton Christensen, Curtis W. Johnson, Michael B. Horn
Publisher: McGraw-Hill Books

In this book, prolific author Clayton Christensen took on America’s crumbling educational system, applying his theory of disruptive change to schools. With his co-authors, he proposes moving away from standardized tests and towards customized learning, student-centric classrooms, and deploying computers to every student. For Christensen, competing in global markets is preceded by competing in the global classroom.

4. The Endless City
Authors: Ricky Burdett and Deyan Sudjic
Publisher: Phaidon

More than half of the human race lives in cities—a figure likely to reach 75% by 2050. The Endless City, edited by Ricky Burdett of the London School of Economics and design curator Deyan Sudjic, puts urban expansion into perspective. The authors convincingly argue that the growth of cities is not just a problem for local government agents or urban planners but is inseparable from such major political and economic forces as globalization, immigration, employment, and sustainability. Many themes of this encyclopedic book, punctuated with vivid photography and illustrations, happened to closely track issues hotly debated during the U.S. Presidential election.

5. The Game-Changer: How You Can Drive Revenue and Profit Growth with Innovation
Authors: A.G. Lafley and Ram Charan
Publisher: Crown Business

Procter & Gamble CEO Lafley and management consultant Charan reveal how P&G and companies such as Hewlett-Packard  and Nokia have taken steps to create fresh products and new markets by making innovation a key corporate strategy. In addition, they look at such practical matters as how to best manage risk when pursuing goals that lack precedents inside a corporation.

6. Groundswell: Winning in a World Transformed by Social Technologies
Authors: Charlene Li and Josh Bernoff
Publisher: Harvard Business Press

Li and Bernoff, both analysts at Forrester Research, present a clearly written and refreshingly grown-up look at social media used by entire corporations, and not just Gen Y staff. They present real-world business narratives of how companies from Best Buy  to Ernst & Young use blogs, Wikis, and social networks to create, promote, and share new ideas, both within corporate walls and among consumers outside them.

7. Here Comes Everybody: The Power of Organizing Without Organizations
Author: Clay Shirky
Publisher: Penguin Press

Author and New York University faculty member Clay Shirky describes the profound impact of social-technological tools on contemporary culture—from e-mail and blogs to Twitter and wikis. Shirky’s book is an example-laden history of the development—and impact—of such tools. For instance, industries such as music and media writhe in a state of turmoil, with no clear strategies to deal with the rise of mass amateurization and cheap and easy distribution. In the author’s view, we’re living in the middle of a revolution as momentous as that which followed the invention of the printing press. Society and industry are being radically reshaped.

8. The New Age of Innovation: Driving Co-Created Value Through Global Networks
Authors: C.K. Prahalad and M.S. Krishnan
Publisher: McGraw-Hill Books

University of Michigan professors C.K. Prahalad and M.S. Krishnan argue that, despite the press attention lavished on companies such as Apple   and Google, modern business is not all about superficial apps and cutting-edge consumer tech. Instead the authors argue that to spur growth, executives must focus on accessing a global network of resources to co-create unique experiences with customers. That means transforming companies by changing processes, technical systems, and supply chain management.

9. The Numerati
Author: Stephen Baker
Publisher: Houghton Mifflin

Baker, a senior writer at BusinessWeek, presents compelling examples of how data gathered from our Web activity, mobile phone calls, and credit-card swipes, are being used to develop ultra-customized products and services.

10. The Venturesome Economy: How Innovation Sustains Prosperity in a More Connected World
Author: Amar Bhidé
Publisher: Princeton University Press

Despite widespread corporate fears that India and China would surpass the U.S. in inventing new technologies, Bhidé, a Columbia Business School professor, provides a provocative, counterintuitive case as to why the U.S. should support the training of foreign workers and research activities by foreign companies. Why? American companies can benefit, he says—pointing out, for example, that many of the acclaimed features on the iPod were actually developed abroad.

As central banks frantically seek ways to battle the deepening global recession, we are seeing innovative ideas in the most unlikely and conservative places.

United States Federal Reserve Chair Ben Bernanke is boldly pioneering a rather new idea in central banking, known as ZIRP – zero interest rate policy. He has set the Fed overnight rates at a band of between zero and 0.25%. Yes, if you are a bank and need short-term money (overnight or for a weekend, say, to meet a payroll), you can borrow from the Fed at essentially zero interest. It is expected that as the United Kingdom recession deepens, Bank of England Governor Mervyn King will also slash rates to zero or near-zero. And Europe is likely to follow suit, as virtually every major European economy sinks into recession.

“Desperation is the mother of innovation,” goes one version of a well-known cliché. Many nations are now desperate, seeking to battle rising unemployment and recession with monetary and fiscal tools. With interest rates at or close to zero, it is now incumbent on fiscal policy – government spending and taxation – to do the job. President-elect Barack Obama has announced, even before he takes office on Jan. 20, a fiscal stimulus package amounting to some $850 b., including infrastructure spending and middle-class tax cuts. 

I hate to be a doomsayer, but – Japan tried zero interest rates for years, after its property bubble burst in 1990. It did not work. The Japanese government and Central Bank pushed cheap money into the system, but people, spooked by huge debts and uncertainty, chose not to borrow. The ones who did borrow were foreigners, who pursued what is now known as the ‘carry trade’ – they borrowed yen, sold the yen, bought dollars and lent the money or invested it in high-yield markets (like Russia). This did not help Japan in the least. 

Look for normally cautious Central Banks to innovate even more radically in future. It has at last occurred to Central Bankers, that this crisis is different from previous ones, and it will take creative thinking to battle it.

In today’s International Herald Tribune, columnist Tom Friedman (author of Hot, Flat & Crowded, and The World is Flat) makes a key observation about innovation, in the course of discussing whether to bail out Detroit. 

The job, says Friedman, of the car companies is “to make the cars people don’t know they want but will buy like crazy when they see them.” I would have been happy to live with my Sony Walkman, Friedman says, had Apple not invented the iPod. Now I can’t live without it. I didn’t know I wanted it, but Apple did. Same with my Toyota hybrid. 

The job of the innovator is not to create what people want – everyone is doing that —  but to create what people don’t know they want but buy like mad when it is provided. 

How in the world can innovators do this?

I believe the answer lies in vision. We ordinary human beings have very limited imagination. We cannot envision radically new things because we live in the concrete world of the ‘now’, what exists today. Great innovators envision a future that is radically different, then make it happen. Henry Ford had that vision. He envisioned middle class working families driving into the countryside on a Sunday in their Model T to enjoy a picnic. And then he made this happen, by inventing the production line.

Detroit’s management, once visionary, has now evolved from visionary to operators to caretakers. Its leadership long ago lost its vision and excitement over building beautiful, fast, cheap, economical cars. And now, says Friedman, they have become undertakers.  

Look at Britain. Britain once dominated the motorcycle industry, led by venerable brands like Norton-Villiers-Triumph, and BSA. In the space of only four years, 1969-73,  they lost their markets totally to Kawasaki Yamaha and Honda. They failed to innovate. They lost their vision. Even when the British government nationalized the motorcycle plants, and injected tons of money, they failed to revive the industry.  

Peter Drucker’s pioneering work on innovation was usually titled, by him, Innovate and Abandon! Abandon old dull products. Innovate visionary new ones. Give people what they may hate at first, then love soon after.  

Do you have the courage?