About Ideas, Innovation, TED Talks, Books, Documentaries, and Travel: September 2011

Wednesday, September 28, 2011

Does the World Still Want Curators?

A curator is defined as 'a keeper or custodian of a museum or other collection'. You can think of an independent bookstore as a curator of a book collection that you might want to buy. The staff actually read the books, and they know how to match books to their customers. They can be instrumental in building readership for a new book because they stimulate that first groundswell of support in the first few months of release. This is one of the points in this Huffington Post article about independent bookstores. The article goes on to pay tribute to such bookstores' ability to create community around the people who frequent their bookstore, and to deplore the possible loss of such important community centres due to disruption of the bookselling and publishing business.

I think of newspapers in much the same way: the editors are curators of the news, selecting from a wide range of possible news items just which ones will be published in their newspaper. They further create a community among the readers of the newspaper. And they are equally threatened by disruptive forces.

But it's not only economic forces which are affecting the fortunes of these two businesses. It's also cultural forces. People increasingly lean on social media for recommendations as to what books to read, or what news to pay attention to. As we rely on our friends we move into a deep spiral of self-reinforcement of our views. Not that newspapers don't have a view themselves. They do. But the best report the news objectively, try to be wide-ranging in their selection criteria, and give space to columnists of many different views. Our friends don't usually do this.

In my humble view, the world needs curators for our intellectual input. The title of this article was about whether the world wanted such curators. Sadly I suspect now.

I'll be looking forward to part two from Huffington Post, which promises to offer suggestions of how independent bookstores can survive.

Thursday, September 22, 2011

The Lean Startup

Last night, I attended a talk by Eric Ries at the Rotman School of Management, here in Toronto. Ries is the author of The Lean Startup: How Today's Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses. Ries is an engaging speaker and presented a number of down-to-earth ideas about how to be successful at a start-up. They mirror ideas I teach in my course, so of course I thought he was brilliant.

I had a hint that I was going to like what he would say when early in his talk he said that he was a fan of Christensen's concepts of disruptive innovation and Jobs to be Done. Any fan of Christensen is a buddy of mine!

Students recall concepts better when there's a catchy phrase that captures the idea and I really liked some of Ries' sound bites and will integrate them into my Innovation course.

If you're building something customers don't want, why be proud of being on time and on budget?

The Jobs to be Done concept says that customers hire products to do a job for them. If customers don't want to hire your product, then nothing else matters. You need to find out - in the quickest and cheapest way - whether customers want to hire your product.

Ries gave an example of a company that developed - at considerable expense and pain - a software app that you could download. When they launched, people could go to a web page, read about the product, and hit the red button if they wanted to download. Nobody hit the red button. This was a valuable lesson: they had built a product that people didn't wanted to hire.

The question was - did they need to actually build the software to learn that lesson? Could they have built that web page with the red button, and a second landing page for people who hit the red button, which said something like 'oops - still in production'. For zero effort they could have learned that virtually nobody landed on that second page. Back to the drawing board.

Customers Don't Know What They Want

Henry Ford is famously quoted as saying "If I'd asked people what they wanted, I would have built a faster horse". This is a critical problem in innovation that is customer-driven: people who are already using a certain product to do a job for them seldom are able to break out of that framework and think of how the problem could be solved in a completely different way. I call this 'solving solutions'. A better approach than asking them is to observe them doing the jobs they normally do and think of how you could improve that task. Then give them an experimental product and observe their behaviour in using it.

Pivot - a change in strategy without a change in vision

When you're introducing a new product or starting a new company, you can almost guarantee that your initial strategy is wrong. So, your job as a startup is to experiment continuously and to figure out when you have the right strategy. Ries calls these changes in strategy pivots. I'm a basketball fan and I love this expression - a basketball player pivots when s/he finds the way to the basket blocked and pivots to continue to the basket, just on a different path. And the player keeps one foot firmly planted during a pivot, suggesting that the strategy is continuously grounded in what went before. What a lovely graphic image.

Pivot? or Persevere?

Timing is everything, and I've been pulling my thoughts together for a whole session on timing in my next courses. Ries added a nice sound bit to my repertoire for these sessions. His question of whether to pivot or to persevere is a fundamental one - and the ability to figure out which approach is correct is key attribute of a good innovator.

The great advantage small companies have over big companies is their agility, the ability to pivot to a new strategy based on what they learned from initial reaction to their products. Is it possible that small companies also have less cultural resistance to the pivot? They may have fewer people invested in the current strategy and this may make it easier to pivot. On the other, a passionate founder may be very invested in a particular strategy and resist a pivot. It's hard to fight the founder.

Invest in Agility, not Prevention

A common challenge to an innovation is around scalability. What if this product is wildly successful and we're not able to scale to meet demad. So, to prevent this possible calamity (we should be so lucky), some companies will invest considerable resources to make sure a product is scalable from the outset. And they'll often invest before they even verify if the product is something that customers want to hire. This is quite typical in a big company where there's concern that a failure in a new product can besmirch the reputation of the whole company.

Ries' advice is to invest in agility, not prevention. Make sure everything about the process of getting a product to market is flexible, enabling scaling at quick notice.

After listening to Ries' talk, I am definitely going to read The Lean Startup - and that's the whole point of a book tour, isn't it?

One of my former students in part way through the book. He is most taken by Ries' definition of waste. Until you figure out what people want, execution that doesn't contribute to that search is waste. Thanks Neil.

Tuesday, September 20, 2011

Economic Outlook

Last week the Economic Club of Canada hosted a breakfast with a panel of economists from the Big Five Canadian banks. On the panel were

Avery Shenfeld, Chief Economist, CIBC World Markets
Derek Burleton, Deputy Chief Economist, TD Bank Financial Group
Craig Wright, Chief Economist RBC Financial Group
Sherry Cooper, Chief Economist, BMO Capital Markets
Warren Jestin, Chief Economist, Scotiabank

All the forecasts were made against a backdrop of extreme political uncertainty, which complicated forecasting to an unusual degree. The forecasts were all pretty gloomy - surprise, surprise.

The main themes that were common to all the forecasts were as follows:

It's going to be a long, arduous, painful recovery. The US economy is a car with a broken transmission. When your transmission is broken, it doesn't matter very much how much gas you give it, it's not going anywhere. Growth estimates were low, 1.5%-2% for US and 1.5% -2.5% for Canada. The IMF today released a forecast that the Canadian economy would grow 2.1% this year and 1.9% next year, which is way down from its April forecast of 2.8% and 2.6% last April.
There's a risk of a short term pause or stall, and a 25-50% risk of short term recession.
Emerging markets will continue to grow. This led to forecast of growth internationally at 3.5%.
Canada is not an island. We will outperform the US, but we are not insulated from what happens in the world, so our growth will also be stunted.
We're going to see low rates for longer than the economists had originally forecast. It will be mid 2012 or even 2013 before Canadian rates rise, and perhaps 2014 before they start rising in the US. There's a risk for Canada getting too far in front of the US.