Kindled Meme

– exploring the purpose of connection


3 Comments

Strategic questions – rethinking winning

I spent today talking strategy with a guy who lives and breaths it – intent on using it to push through a lasting change to the way his company serves its community. And so a post by Roger Martin on the HBR blog today came at me at a useful time.

Roger says that strategy is making of an integrated set of choices – positioning the firm in its industry so as to create sustainable advantage relative to competition and deliver superior financial returns. He encourages people to answer 5 simple questions in a strategy – and he makes a separation between building budgets and delivery plans (which most people confuse as strategy) from the informed clarity of a strategy that sets direction for a period ahead.

Rogers questions are familiar – its the ‘Traditional Strategy’ view – about resources and winning – which Nilofer Merchant has declared as dead.

Nilofer questions whether this self-serving view of strategy is still valid in todays world and looks rationally at the role of collaboration and communities and their co-dependence. This coupling of organisations is know to drive innovation and offer all kinds of benefits as part of a business model – and a strategy is more about a company being ‘coupled’ than about the firm winning alone.

I like Nilofer’s contrarian views and in many cases agree with her – Ive seen the impact and opportunity in innovation partnerships in the UK  – people working as complements to each other can be a real asset and open up opportunities well beyond the capabilities of a single firm competing solely upon its own resources.

Yet, if a firm is resource-rich its theory of business will be grounded in making the most of what its got and controlling all that you need internally – removing ambiguity, being planful and  being in control. The guy I was meeting with today was within a multinational bank – you can be sure he has resources.

I recently found this video by Clay Shirky talking about the communites in the software industry – a great speaker –  he talks about how value is created in loosely-coupled but strongly aligned open-source communities. If you like control and your own resources this doesn’t compute. He makes fun of guys at AT&T who didnt get the open philosophy – about how you can be ‘porous’ to external value.

“They didn’t care that they had seen it work in practice becasue they already knew it wouldn’t work in theory”

It depends how you see the world – and its a strategic choice as to how you leverage partners, customers, suppliers and your own staff. Getting intimate, listening and learning, and acting in close-step with external groups around your business is not for everyone – but the evidence is there that it pays off.

Roger’s article says Strategy is about answering 5 questions – and hurrah – you should  be able to do that on less than 5 pages. Not because strategy is light weight – but because the choices it captures are built upon solid thinking, research and market insights.

When you have the facts to hand – the killer choices you should make become much clearer.

Rogers 5 questions are these:

What is our winning aspiration

Where will we play

How will we win

What capabilities need to be in place;

What management systems must be instituted

When I think of Rogers focus on winning I think of the anecdotes from Prussian military strategy that my MBA taught. Its pretty clear its about winning – with stories of fools that get it wrong.

Rogers questions are not the same questions that my Prof challenged us to ask – but then there is no one dominant way to do strategy. No one model that is correct – we accept all have strengths and weaknesses. All though, are good at framing an inquiry amongst teams and offer a common language make sense of our worlds and structure our choices.

And when I think of Nilofers perspective of how strategy needs to change, I think of new business models with the Key Partners and emerging social business channels that are shaping the world today. Both need engagement, shared beliefs and some degree of trust to make them work.

We still need to win but we will be doing it through others – sharing risk and co-building value. When I look at the ‘TS’ perspective – about the resource-based view of strategy – about finance, IP, assets that you have as the basis of a plan- these are all still valid – but relational capacity is about to become so much more important – culture, attitude and collaborative beliefs that underpin our reputation as good people to do business with.

For my part I believe that traditional strategy is still valid we just have to rethink how we define winning – keeping our eyes on creating and unlocking value and less focus on spilling our competitors blood on the streets.

For a bit of cheeky fun – check out Nilofer Merchants obituary to traditional strategy below.

And this is the link to Roger Martins Blog that started off my reflection.

Nilofer-Obituary-for-traditional-strategy

Advertisements


Leave a comment

Influencing the UK’s Innovation – Collaboration with the TSB

The are many factors that compel companies to work together on their innovation programmes – learning and exploration of new markets and technologies, or tapping into each others resources and capabilities. But in the UK – when asking SME business leaders what gives them the push to collaborate – the UK’s Technology Strategy Board (TSB) and its grant funded innovation schemes is a major driver for being part of the UK innovation ecosystem.

While ‘Open Innovation’ is often cited in academic literature as being tough for SME’s  – they have a “liability of smallness” and don’t have power and influence in their industry or the resources and maturity of multi-nationals – none of that is a barrier for agile and adventurous UK SME companies – and the path to collaboration is made all the easier due to the policy choices of this UK government body.

When performing the literature review for my own research, the world of innovation and collaboration throws up lots of lessons – but when trying to pin down the academic understanding of “What drives successful inter-firm collaboration?” – government intervention was not what I was looking for.

But during 12 semi-structured interviews ‘The TSB” kept emerging. I’m all for the force of innovation and collaboration – but I found that effective macro-economic policy also plays a part in supporting the UK as a place to be ‘open’ in innovation.

Out of twelve C-level interviews, eleven of the candidate use TSB funding.

This is what they said:

“I mean the Technology, Strategy board, actually is probably a fantastic example of enabling Open Innovation in UK because of all the TSB funded projects. We’ve done one –  we’ve been involved in three big ones and we’ve got a fourth one where we are putting the final application in now.  And they’re obviously, you know, you have a collaboration agreement, you have a number of companies involved and they’re very good at getting people working together.  Maybe companies are not being as open as they could be, they don’t have to be totally open, but they do get people sitting around together and talking which is very good.”

“The TSB is picking up a large chunk of the role of the US VC fund because we don’t quite have the same investment culture here. A lot of the early-stage investors have gone away. We don’t quite have the investment culture here in the UK.”

“I must keep highlighting that the Technology Strategy Board has a key role to play – they are pretty good – they could probably do even more if they have more money – but they are a big help – the key mechanism for driving businesses to work with other businesses.”

The TSB and Knowledge Transfer Partnerships and the “_connect” infrastructure also uncover potential new markets

“We are member of a couple of the knowledge transfer networks. We are just in receipt of a confirmation letter from the TSB for a collaborative activity around an innovative use of our equipment.”

While the TSB has formal programmes these can be used to support growth in venturing too

“We have used our IP to form a new company that was done with a TSB grant. We licensed some of our IP into that new company. That company was established and we together assigned a value to the IP that we took as a stake in the company as part of the funding round.”

Working under TSB requirements also give a structure to a partnership and can set out key terms, boundaries and expectations:

“You have to start to be very careful about co-creating explicit IP and if you actually expect to create protected IP. We will do that but we have to go through more detailed negotiations. It tends to be more of the TSB funded grant where you have to make sure that everything is notified in advance. This is inconvenient but we have done it and it’s fairly surmountable and were also on an EU grant at the moment where these things have to be codified in advance.”

The TSB funding is UK-centric – the world may becoming ‘flat’ – but the stimulus is local. Yet opportunity is frames by such boundaries

“Up comes this call for TSB funding and we looked at them and thought this is just perfect for the first time ever I am looking at TSB opportunity that fits exactly what we need and we’ve managed to find UK manufacturing partners and fabricators who are willing to partner in that.”

“I think what the TSB do is fine, within the terms of their remit. The problem is they are not on a firm footing – they are bounded to support UK-only partnerships – and the industrial base of this country has been so badly damaged. If you look at the Fraunhofer Institute in Germany there are so many of them – such a fertile ground because there are just so many small family run manufacturing businesses within with an interest in innovation within Germany.”

Often Universities can be good partners – but more than that the TSB encourages this connection:

“There’s this one particular project I’m working on well with thinking of setting up a knowledge transfer partnership which would involve the University so we’re looking at a particular case because the university have access to a particular expertise that we want to benefit from.”

“You sometimes need a university when you go after aspects of different funding, you need a university partners sometimes to access the funding. If they see ‘multinational company’, ‘service company’ and ‘university’ together then they will fund it if you bring in all three parties.”

“We have had two TSB grants to work with Universities on for Cambridge and one for UCL and we have an ongoing relationship there.”

Buts its not just TSB funding –  early stage and highly innovative companies in the bio-tech, chemical, medical device and  software also tap into Research Council grants such as EPSRC ,and EU sources of funding permit partnerships beyond the UK.

In the future we see us doing more of our own in-house product development its just and we have programmes in place to do that but again these are grant funded through EU  funding that we have been able to secure –   we just cant justify the cost of doing that on from investor capitol.

Under the auspices of framework 6 and 7 programs of European Union funded activities we have developed new techniques  new service and products.

The choice and approach to funding was strategic and not just a form filling exercise – there are many stakeholders that can help drive your choices  and for those that scan the globe in search of knowledge you may build partnerships that allow you to tap into schemes such as DARPA – a practice that has been very successful for some UK businesses as these guys show here.

Understanding funding and its role in innovation is clearly a strategic capability in the UK and Europe.

While innovation partnerships are talked of as burdens on the SME (transactional costs) – leveraging the TSB with the right partners is a rite of passage for the UK innovators I interviewed – connecting knowledge, businesses and facilitating conversation and structured outcomes.

Having a government intervention is not the ideal of free-market efficiencies – but it does seem to making up for market failings – it gives the collaboration conversation some real teeth.

Business was always about scarce resources – with this funding strategy it seems the open innovators are finding what they need.

Well done TSB.

 


Leave a comment

#SpreadTheCheer – reduce the tax

Starbucks is making a good case for testing customer loyalty right now – their tax-paying practices have made a ding into goodwill and  sentiment –  with the UK ‘bashtagging’ captured here by Mashable.

I used to see Starbucks as a big success story – the magic of Howard – the corporate culture and power to the barista to make a difference.

But right now its gone all out of shape for them in the UK – no cinnamon latte for me this christmas time.

The picture above is from the big screen in the Natural History Museum in London over the weekend – it went wrong – the message is clear – they are in a pickle – and not doing well in handling it.

But how would we play it differently if we had the master keys to the corporate bean grinder?

In Ana Canhoto’s recent post on customer loyalty she shares the following:

According to this paper, while customers with a strong relationship with the brand may be more forgiving, when they do complain publicly (e.g., on website), they also exhibited a heightened desire for revenge (e.g., tell friends about the problems they experienced) and avoidance(e.g., cut interactions with the firm). This desire is not only more intense than that of other customers, but also lasts longer.

It is a bleak picture.

Once emotionally committed customers complain publicly, they seem unable to let go – love turns into hate, and patronage seems lost!

Right now Starbucks would kill to get the love back again – forget growth – just rewind the clock would be nice – keep their heads down. Maybe play it differently.

It’s also interesting in the age of Big Data just how the impact would have been observed from till receipts. What was the algorithm they used to decide how much tax they should propose paying? What is the value of the customers they have lost for good (Outraged switchers) vs those that could be pacified by seeing a tax-offering vs those that ‘just don’t care’.

Just how did they price that impact to brand and come up with the sum for a self-declared tax offering?

So how do we know who is actually playing nice in this game?

I’d like to see an infographic that shows where the cost of a coffee goes to – shown as ‘swigs of the drink’. How many gulps go to ingredients, how many on consumables, how many on staff costs, how many to profit and the masterful use of corporate cross-charging. At the moment Starbucks corporation tax is no more than the froth on top of a very flat white – or the grits in the bottom. I also want to see the end to end supply chain – but lets park that for now…

I’d like to see all the coffee chains shown in the infographic – all in a row – let’s see how they compare visually and how many are contributing to UK Plc. Some caffeine transparency.

Unfortunately the CFO of the company paying the most tax is unlikely to do his professional standing too much good – the tax-minimising Starbucks guys have mastered the art by any boardroom metrics.I wonder if the CMO can evidence brand goodwill for being a better corporate citizen and justify the tax paid through improved brand sentiment?

In fairness though, all corporates are up to the same game – they all get the same wizened advice from the Big 4 – it’s Deloittes that advise Starbucks if memory serves me – what a shower of despicable specimens

But maybe I painting this unfairly – is this just about business?

Isn’t strategy about winning for the firm?

Arn’t these guys managing Starbucks just being good custodians for the shareholders?

What would you do differently if you were in their shoes?

How would you #SpreadTheCheer this christmas?


2 Comments

Bedknobs and Brooms sticks? No Wizards, Stools and Pirates…

The Wizards Stool.

I’m in the middle of doing a series of research interviews at the moment -looking into how SMEs perform open innovation – how they partner with other firms to come up with new solutions that will drive the business forward.

The interviews typically take 45 min but every now and again I get a chance to speak to somebody really amazing who comes up with so many insights that the conversation moves on to be closer to an hour and a half. This is no problem to me – I’m really grateful when people are prepared to give up their time and share their insights. As well as answering my research questions I glean so much wisdom from these people. In Oxfordshire there really are some incredible companies who are doing some great innovation.

A couple weeks ago I got to meet with one such guy who’s been involved with the R&D function of local firm for just over 30 years. As you can imagine, during that time he has built up lots of experience and insights – he’s a real Innovation Wizard. During the interview he told many anecdotes all helping frame the challenges of being innovative in small companies – the art of storytelling is strong with him.

One of the gems he shared with me was how he viewed innovation as a 3 legged stool.

The Wizards Stool

One of the legs he views as the scientific basis of his firm. The roots of this company are in applying chemical processes – mostly in printing. The company has been going for over 150 years and has a strong culture of scientific discovery within the organisation that has driven the innovation that constantly reinvents that firms model.

The second leg of the stool he views as the process and how to they take that core intellectual property to be used and scaled for a commercial offering. And the 3rd leg of the stool he views as the market offering – the deep customer insights that we tap into when we position our solution on the market.

The trick with the stool analogy is in the choices for how you move each of these legs whilst you’re innovating.

This all placed a mental picture in my mind of my 5-year-old son sitting on that stool and how he drives us nuts by swinging back on the legs – rocking back and to. We know one of these day he will “come a cropper’ – but at the same time the image helped me understand what this Wizard was telling me. Its about risk and organisational stability.

Through his eyes he sees that you should only move one or two legs of that stool at any one time. If you move just one leg – innovation changes either the science, the process or the addressable market that you are intending to serve.

If you are comfortable with a little less stability, you can move two legs of the stool at one time – maybe you take a new process that can take you into a new market. Maybe you take on board some new IP and at the same time enter into a nascent market. But the deal is you can’t move all 3 legs at any one time.

It’s a good analogy because we’ve got enough common sense to know you can’t make a stool levitate – we know that we need a least some stability and some point of permanence else you struggle to keep your orientation and to justify how we are still strategically aligned with what the organisation can do today (skills, linkages, reputation and brands).

Pirates and Innovation

Near the start of the year Frank and the guys in Oxford Business First – the networking group – put on a series of events called ‘Practical innovation’.

The idea was to connect a group of people in local business community to think about being innovative and drive growth. On the first event Stuart Miller from Bybox gave his energetic talk about how innovation is at the core of his own company.

Stuart tells a great story and at the heart of it is a discussion on how at Bybox they recruit ‘Pirates’ -people who challenge the status quo and are comfortable exploring new options – stepping outside of existing structures and driving the company forward. Stuart makes people laugh when he tells them how he has the Jolly Roger flag flying outside the front of their offices in Wantage. It’s a great story very engaging and his metaphor is backed up by a recent article capturing Steve jobs walking along the same lines:

“if you’re bright, but you prefer the size and structure and traditions of the navy, go join IBM. If you’re bright and think different and are willing to go for it as part of a special, unified, and unconventional team, become a pirate.”

 

On the first Practical Innovation event Stuart was accompanied by one of his colleagues Indy, when the room asked how is it working in such a tense and highly provocative environment Indy did let slip that sometimes too many pirates can be too much and that you do need some sensibility and calm and a degree of consensus at the midst of all this exploration.

This kind of tension keeps organisations moving and keep the thinking innovative was called Creative Abrasion by Dorothy Leonard-Barton, in an article she wrote back in 1996.’ – and whilst it can be gritty to start with the resulting creativity and innovation justifies any pains.So whilst it great to have pirates on board – it’s fun and explosive – there’s also a degree of discomfort in change and moving forwards and exploring unknown territory.

I think everybody in the room really enjoyed Stuart’s story its great if you frame a journey as an adventure – but one guy in the room that evening asked the question:

“When does innovation go a step too far?”

This is a really good question and I certainly didn’t have a clear answer for this at the time. People talked about it but I don’t think there’s any simple answer.

If you’re working in a large firm maybe it’s just takes a while to get things moving. You could be an ‘Oil Tanker’ and pretty sluggish, and from the inside you know that it’s not worth pushing too much – if there are too many waves of innovation one after the other maybe none of them will stick. Maybe you’ve got to pick fights – after all innovation isn’t just about technology or ideas or new markets it’s actually about embedding change inside the organisation. Change can be hard and so maybe it’s reasonable that innovation can go too far if it is too disorienting in some organisational cultures.

In high-growth SMEs innovation is a very different kettle of fish. Firms are known to be flexible and agile – directly promoting this as their key strength. One of the people I’ve interviewed recently made a big point of this and he emphasises with his team that, whilst they have a clear strategy and a clear purpose and they never take their eye off the customer’s requirements; they can also turn on a dime and they are permitted to explore new avenues. After all why be an SME if you can’t be flexible and aggressive.

But again in this environment innovation could go to far. Too much ambition and to much drive can lead to burnout. It’s definitely the case that people in small businesses have a different ‘gene pool’ to those people that fit comfortably in larger firms – but everybody at some point will get low on energy and feel disoriented from an innovation too far

An Innovation Too Far?

When I heard about the stool story from my Innovation Wizard in Oxfordshire I got thinking how it offered 3 dimensions that might help us view when innovation is too far. Clearly the Wizard didn’t want to move all 3 legs. Change in any of these ‘legs’ brings a degree of risk that needs to be assessed – trying to get all 3 to move at the same time is just one innovation step too far.

I also think the analogy of the stool can be stretched one step further. May be the height of the stool correlates of just how ambitious you’re being. Is the stool too high for people to get on? Have you reached too high and can people still believe in what you’re trying to achieve?

Also stools can be pretty uncomfortable things. You need to take people with you on an innovation journey.Is the change too much? Do you still have the backing of everybody in the company? Are other stakeholders still on board your stool?

Either way – I like the stool – a clear mental picture in our minds and it helps us do some quick sense-making of what is planned and how it fits in with our strategic assets and resources inside the company.

What do you think? Can you make stools levitate? Have you got a neat trick that allows you to climb greater heights? And what’s the secret to making a stool comfortable enough that everybody wants to get on board – and not just smile when you inspire them – but makes them cling on during the full journey of change?

Whats your favourite Innovation and Change metaphor?