Even during times of relative stability, making these strategic choices can be challenging. Making choices in today’s environment of accelerating technological change, turbulent geo-politics and systemic polycrisis can be paralysing. So-called Black Swan, Black Elephant and Black jellyfish events are increasing in frequency. This expanded "black menagerie", coined by futurists Ziauddin Sardar and John Sweeney, represents different post-normal potentialities, and provides a framework for exploring a range of futures.
More than ever, to develop a resilient growth strategy, leaders need to call on and consider diverse experience and perspectives.
Psychologist and marketing professor Adam Alter, author of Anatomy of a Breakthrough, identifies three groups of people to be aware of:
A black sheep is an idiom of English language that describes a member of a group who is different from the rest, someone who doesn’t fit in. It typically has negative connotations. In psychology, the black sheep effect refers to the tendency of group members to judge likeable ingroup members more positively and deviant ingroup members more negatively than comparable outgroup members.
Yet these same qualities also make black sheep invaluable, if rarely tapped, organisational assets. Black sheep are the divergent thinkers who can shake up organisational complacency, envision new futures and help navigate through ambiguity. With supportive leadership, they can generate the creative tension that leads to orthogonal ideas, breakthrough thinking and new ventures.
If your innovation culture is nascent, look to external advisors to act as these black sheep. Trained strategy and innovation coaches don’t just guide your teams through a process, but act as provocateurs who productively challenge the thinking, and enable new diversity of thought. These same black sheep often become your best entrepreneurs in residence, your best new venture builders.
To further explore how a few black sheep can advance your strategic thinking, get in contact.
]]>A previous post covered the need, and a range of options, for organisations to implement a contextually appropriate innovation operating model in order to successfully pursue and execute their innovation strategy. But, as noted, having the right innovation operating model is but one part of the puzzle and in this post we’ll focus on another vital ingredient - visionary leadership.
It is well documented that a pre-requisite for corporate innovation effort to bear fruit is demonstrable top-level support. Yet research routinely reveals that, in the majority of organisations, the proportion of time allocated by senior executives to developing their thinking about the future potential, or the opportunities for disruption, of the companies they are steering falls short of this.
I recently had the opportunity to hear from and meet Michael Wilkens, one of the first people to adopt and apply Osterwalder's prototype Business Model Canvas in a corporate setting. Michael is now the Chairman of more than a dozen European companies and a passionate business model innovator. In Michael's experience, most boards spend eighty percent of their time focused on providing financial oversight and ensuring adequate resources; on legal compliance and risk management; and on monitoring and evaluating the performance of the executive team. Just twenty percent of their time, at best, is allocated to establishing a vision and a strategic plan.
Further, most currently serving board members attained their positions after demonstrating their capability at operating businesses through prior decades of relative macro-economic stability. They demonstrated their prowess at exploiting the established industrial business models of the companies they helped to steer or helmed. They did not become board members by exercising their imagination, nor by exploring the future, and certainly not by taking risks with new business models.
But we are no longer living in stable macro-economic times. And for risk tolerant entreprenurs presents exciting opportunities to harness new technologies and launch new businesses. In today’s volatile and uncertain operating environment, the role of board members and the CEO must be to ensure that the people within the business are enabled to develop the explore mindset of startups. Specifically, they must be enabled to explore the potential and demand for new business models that will enable them to prosper in any of the multiple futures that scenario planning might illuminate. For this you need leaders prepared to explore beyond what has worked for them in the past, to exercise curiosity and imagination, and to develop their strategic peripheral vision. Michael argues persuasively for the need for boards to dramatically invert that 80/20 time allocation.
For all of us, and particularly for senior leaders, carving out a greater proportion of your working hours to create the physical, virtual and head space for immersion in the new technologies and other drivers of change has become essential. Developing a real understanding of the strategic potential of new technologies, and of the impacts and implications of the macro trends and megatrends is key to de-risking the future of any organisation.
And, given the industry-spanning nature of today’s ecosystems, and the complexity of the challenges, immersion is only truly effective when it is a shared experience that generates integrative, collaborative thinking about the futures that these new technologies are enabling and societal expectations demand. Collective immersion is the key to surfacing diverse perspectives, inspiring better questions, and accelerating their systematic exploration if we are not to continue to see a decline in the lifespan of corporations.
Participation in shared experiences amplifies human connection, fast-tracks breakthrough thinking, and fosters ongoing ecosystem collaboration. Leading multi-national organisations invest heavily in immersive programs that comprise a variety of elements. What successful programs have in common is a focus on facilitating regular, experiential learning opportunities and knowledge exchange across their ecosystem backed up by access to platforms that provide for ongoing learning and engagement across their organisations as the landscape shifts. In rapidly changing times, organisations who view immersion as an annual exercise will be left behind by those who nurture a focus on continuous foresight, enabling pursuit of an agile innovation strategy.
If you would like help to developing a program for your organisation that enables collective strategic foresight, please get in contact.
]]>Markets are in constant evolution, and customer preferences and behaviours continually changing, but the interconnectedness of the world today means big shifts occur with unprecedented rapidity. Layer on top of that paradigm shifting technologies unleashed with increasing frequency.
To avoid becoming irrelevant, you need an innovation strategy, together with an internal capability supported not only by demonstrable support from leadership but the right enabling structures to explore the new business models and value propositions that will secure advantage in a given future scenario.
The ability to simultaneously exploit existing capabilities and explore new opportunities, the ability to operate as an ambidextrous organisation, has for years been widely recognized as a critical capability in increasingly dynamic operating environments. Achieving the right balance between the seemingly contradictory goals of exploitation (requiring efficiency, optimization, and incremental improvement) and exploration (requiring innovation, experimentation, and risk-taking), has never been an easy task. Alongside visionary leadership, it has required developing an enterprise-wide culture of innovation, and implementing distinct enabling structures, defined resources and separate portfolio management.
A variety of approaches to structuring organisations to achieve such ‘ambidexterity’ have been experimented with, broadly categorised as centralised, decentralised and hybrid innovation operating models.
Centralized innovation operating models are typically characterized by a high degree of control and coordination, with innovation activities managed by a central team or department.
Decentralized innovation operating models, on the other hand, give more autonomy to individual teams or business units to pursue their own innovation initiatives.
Hybrid innovation operating models combine elements of both centralized and decentralized structures in an attempt to amplify the benefits of both structures while minimizing their drawbacks.
However, given the increasingly complex operating environment, and the need to embrace the possibility of multiple unknown potential future states, leading corporations are shifting from balancing execution and exploration to integrating them.
Ecosystem enabling innovation operating models can create synergies that improve the economics of innovation, significantly reducing the time between idea incubation and realization at scale. They optimise organisational learning and responsiveness in the face of multiple plausible futures, and accelerate the iterative process of innovation.
Haier's Rendanheyi model is the antithesis of hierarchical, bureaucratic models that have predominated for the last century. Everyone has direct contact with the customers. Haier has taken the decentralised innovation operating model and made it the central tenet of the whole organisation. Quoting Haier CEO Zhang Ruimin “In the Fourth Industrial Revolution, all employees will be value creators or entrepreneurs. This is the basic condition to meet the call of the times, and without self-organization, you will not be keeping pace.”
Of course, the most effective innovation operating model for your organisation will depend on your specific organisational context and ambition, as well as your existing capabilities and resources. For help, get in contact.
]]>ChatGPT, running on GPT3, stunned global audiences on release less than six months ago in late November 2022. Barely three months later, the large language model on which ChatGPT runs was updated to the far more powerful GPT4 which incorporated the ability to respond to image as well as text prompts. And just weeks after that, support for plugins became available, enabling ChatGPT to access up-to-date information, run computations, or use third-party services from the likes of Shopify, Expedia and Zapier.
Start-ups have already released a plethora of apps on top of Open AI’s gated GPT large language model. One such app, offering an early signal into a more autonomous future, is AutoGPT. Where ChatGPT is a remarkable chatbot, responding to your queries one by one, AutoGPT is an autonomous agent, programmed to complete a complex array of tasks, with minimal human direction. You set an objective for AI to do, break this down into up to five steps, then wait for a series of AI agents to get to work, interacting autonomously with each other, before responding to you.
Auto-GPT is an experimental open-source application at a very early stage of development. It requires basic programming experience but, alongside low and no-code tools, it is a powerful illustration of how AI in general, and powerful large language models such as GPT-4 specifically, are rapidly accelerating the democratization of software development.
AutoGPT heralds the potential for relatively inexperienced developers to, inexpensively, not only replicate the functionality today offered by often expensive enterprise SaaS, but to customise it to an organisations’ specific needs and constraints. By using AutoGPT to generate customized solutions for routine tasks, organisations could potentially achieve significant cost savings and efficiencies compared to using traditional enterprise software.
The human judgement currently applied to making choices around optimal technology stacks might become irrelevant. Where we humans have emotional and cognitive biases and preferences, AI is ruthlessly efficient and platform agnostic. Autonomous agents simply interrogate the available API endpoints and work within the advised constraints to deliver the desired outcome in the most efficient way possible. Instructing autonomous agents to continually scan for optimal solutions and new releases that address changing needs and constraints could automate continuous improvement.
The human brain struggles to think beyond linear progressions, and to understand exponential growth, hence new futures arrive much sooner than the majority of us can imagine. Prior to the release of ChatGPT, I articulated the transformational potential of AI to accelerate environmental scanning and scenario development by a significant factor and at scale. The rate of technology advance since then is such that scenarios that we might previously imagined might play out over a decade becoming possible within a year.
As paradigms shift, fortune favours the prepared. What new value propositions can these tools enable for your organisation? How can you design new business models to capture their value? How might your organisation be disrupted?
Every organisation should be investigating how they can leverage these new tools to augment human potential whilst delivering a step-change in efficiency for routine workflows across every department.
The era of the personal digital assistant for everyone across the organisation is rapidly approaching. Indeed, we could soon all have the capability to create our own agents to achieve the goals and complete the tasks that we set them. Developing the critical thinking, curiosity and creativity of your teams to be able to ask the right questions, not just of each other but of our new machine co-pilots, will be paramount to learning fast and remaining competitive.
For help and to learn more, get in contact.
]]>With the arrival of every new technology, the heralded possibilities for societal advancement are usually tempered by questions of how they might negatively impact our ways of living and working. Generating diverse perspectives and developing frameworks to navigate these questions in today’s complex world is the focus of the field of cybernetics.
The term cybernetics was coined in 1947 by Norbert Weiner, an MIT Professor, who defined it as the scientific study of control and communications between animals and machines. More simply, cybernetics looks at the intended and unintended consequences of technology for people and the planet. In the aftermath of World War Two (WW2), a series of conferences in New York convened academics across disciplines to consider: how might new computational technologies change people’s lives?
Military investment into new technologies during WW2 unleashed a wave of innovation, not least the capability to harness the process of nuclear fission to devasting effect in the form of the atomic bomb. The underlying concern of Weiner and the early cyberneticists was that, as we invented, commercialized, or operationalized new technologies, we needed to have a better set of tools to structure our thinking to anticipate their systemic impact.
Artificial Intelligence (AI) is an umbrella term for a spectrum of capability endowed by a number of different technologies to both physical machines and soft systems. Now widely recognised as the next “general-purpose” technology, similar to electricity or the internet, AI was a nascent field in at the time, and neural networks were an early focus of cybernetics. Now that we have the computational power, cloud and communications technologies to unleash AI at scale, building capability in the trans-disciplinary, integrative, collective, systems thinking of cybernetics is becoming a key requirement for leaders of organisations across the board.
If you’ve previously engaged in the exploration of socio-technical systems, and are thinking cybernetics sounds somewhat similar, you’d be right. The crucial difference is that cybernetics places an explicit emphasis on the environmental impact of technologies, along with the human impacts, making it a truly holistic approach with which to tackle today’s increasingly interconnected ‘wicked problems', and ‘poly-crises’.
Unfortunately, many of our systems have been designed around accountability rather than human need let alone environmental impact. So how can we influence and steer our systems towards our preferred futures?
To understand any system, you first need to understand it’s components, which can be considered within five categories - agents, agendas, data, infrastructure and processes. Importantly, much as we have argued before for the need to shift from ‘human centred’ thinking to ‘ecosystem centred' thinking, we need to consider agency in terms beyond that of the will of humans and their organisations. Anything that acts to produce a particular result has agency. A tree or a river that diverts the course of a new road or placement of a new structure is exhibiting agency.
Interrogating the relationships between system elements is both key to preventing unintended harms and key to unlocking new opportunities to create value and impact. Change the relationships and you change the system. And much as Einstein reportedly advocated that, given an hour, he would spend fifty-five minutes thinking about the problem, and five minutes thinking about the solution, it is incumbent on leaders and entrepreneurs to invest the time to interrogate the potential impacts of new technologies before unleashing them.
No organisation would want to be in the position of the Australian Government, attempting to defend the debacle resulting from the application of flawed algorithmic logic of new technology left to run unsupervised. We no longer have the right to say that we “couldn’t anticipate” the outcomes of letting new technologies loose when we have so much experience to learn from.
To build positive futures, you need to tell positive stories. With the right design tools and frameworks focused on ecosystems not just humans, and with strong design leadership, your team can imagine preferable futures in which new technologies such as AI deliver positive outcomes for humans and the environment.
To learn more, get in contact.
{This post was not authored by ChatGPT}
]]>To start off the new year, I thought I'd share a perspective as to how to demystify what we mean by ‘innovation’, by considering the term through three lenses.
On hearing the word ‘innovation’, it’s all too common for our minds to jump to either tangible new products such as Apple’s Airpods, or to new digital apps such as Uber, or the new generative AI application, ChatGPT.
Whilst new products are certainly a very important outcome of innovation, they are not the only one.
Innovation occurs throughout all areas of your business, and your business model.
Since you can easily lose people by starting to talk about ‘business models’, a simple theatrical analogy can be helpful:
There is a media-fuelled perception that innovation is brought into the world by lone geniuses through some mysterious means. Incredibly innovative individuals such as Steve Jobs, Elon Musk and Jeff Bezos have become household names.
Whilst this might occasionally happen, this is very much the exception.
Innovation is a team sport, underpinned by a creative yet disciplined, evidence-driven process.
Once you frame innovation as your organisational capability to consistently follow a repeatable process, achieving the desired outcomes becomes that much easier:
It is also very common to hear people disagreeing about what constitutes innovation – does it have to be something new to world and ground-breaking or does continuous improvement count?
The reality is that, given innovation is about creating new value, it all counts.
Innovation occurs across a broad spectrum of ambition, commonly distinguished on three levels.
The specific articulation of these needs to be relevant to your organisation, but here's one expression of these different “levels of innovation ambition”:
There’s a very big difference between asking you team to improve the known the known and invent the future. Achieving a common language and understanding of where innovation happens, how it happens and what it looks like within your business, is a key first step to enabling you teams to deliver it.
To learn more - get in contact
]]>Having only just discussed the potential for generative AI to accelerate the development of strategic foresight last month, an accessible new product has landed. With early access, having already been using DALL-E, OpenAI's generative AI for image creation, I jumped online to test it out.
When asked to "Explain how generative AI might be applied to develop strategic foresight and futures", this is how ChatGPT responded:
"Generative AI is a type of artificial intelligence that is capable of generating new and unique outputs based on a given set of inputs. This can include things like generating new images, text, or other types of data. In the context of strategic foresight and futures, generative AI could be used to help generate new ideas and possibilities for the future.
For example, a generative AI system could be trained on a large dataset of historical data and trends, as well as information about current events and developments in a particular industry or field. The system could then use this information to generate new scenarios and predictions for the future, taking into account a wide range of possible variables and factors.
These predictions and scenarios could then be used by organizations to develop strategic plans and make decisions about the future. By providing a diverse range of possible future outcomes, generative AI could help organizations to be more prepared and flexible in their planning, and better able to respond to a wide range of potential future scenarios.
Overall, generative AI has the potential to be a valuable tool in the field of strategic foresight and futures, by providing organizations with new and unique insights into the future and helping them to develop more effective and agile strategies."
All of which sounds articulate and perfectly plausible, if a little lacking in personality.
On first use ChatGPT appears magical. It even understands some of it’s own limitations, including that because it has only been trained on datasets through to 2021. Ask it anything about a major event in 2022 and it will politely advise that it has nothing to reference.
And it's certainly not infalliable, given that its output is probabalistic, and not based on a genuine understanding of what is right or wrong. It is referencing all manner of opinions, facts and disinformation recorded online. So we all still need to do our homework.
The underlying technology will undoubtedly prove truly disruptive across a broad range of industries. ChatGPT is currently based on a now almost two year old model, GPT3. Next year we can expect the more powerful GPT4 to be released, and without doubt it will develop into a real time application.
Critical thinking, verification and editing will be ever more essential human skills to hone at the start of this new collaborative journey alongside generative AI.
]]>Machine learning's capability for pattern recognition across the vast number of data points being generated daily across the globe, whether from new entries into patent databases, new scientific research publications, new applications of technologies, is enabling the accelerated identification of weak signals of change at the strategic periphery.
So, what foresight tasks that humans do today might AI do in the near future?
Without question, AI's superiority at scanning and analysing huge amounts of data to detect the weak signals ahead of big shifts, will reduce the human hours currently invested in desktop research and subsequent analysis.
It is likely that the rapidly developing capabilities of generative AI will increasingly help us to imagine future scenarios, accelerating and enhancing our creativity in scenario planning. Generative AI can rapidly create text, images and even video from simple text prompts, which provides inspiration for further iteration and the creation of futures narratives and visualisations. Perhaps it may even be able to identify the tipping points that will lead to any one scenario to eventuating over another.
In the near future, humans will still retain their superiority for sensemaking, generating insight and critical thinking around the priorities. But with ever expanding neural networks, AI will surely advance over the longer term in its ability to curate the trends, connect the dots, and perhaps uncover new innovation opportunity spaces, and to accelerate assessment and human decision making.
In an ever more complex operating environment, access to these capabilities will be a key source of advantage.
What are some of the challenges?
Possibly the most pressing challenge for many organisations will be access to data, first of all proprietary data, and then to third party data, which is an essential precursor to applying AI to ‘connect the dots’ within.
Data security is a key concern, whilst storage and processing are currently extraordinarily energy intensive.
Others include our ability to remove bias from models that are trained on human activity that has inherent bias, and figuring out how exactly we humans will interface and collaborate with AI to amplify our human creativity and problem-solving ability.
Transparency in the algorithmic models and underlying data will be essential for senior leaders and Board to have confidence in the thoughtful implementation of AI derived recommendations.
What capabilities will organisations need to develop?
AI and data literacy will be vitally important to develop throughout the workforce. Much as every business has become a digital business over the last two decades, AI will become is a critical competency to develop during the next decade.
Not every organisation will need to develop the capability to build its own models, but organisations must develop a baseline understanding of AI and how it can be applied to generate business outcomes. Those that don’t have the capability to apply AI techniques will start to see their competitive edge eroded by those that do.
The past three years have heightened the need to develop resilience and agility with organisations. Organisations must plan not towards a singular future extrapolated from the present, but for a variety of scenarios that may.
This requires developing capability in strategic foresight, and tightly integrating this into organisational systems. AI’s potential to accelerate environmental scanning and robust scenario development by a significant factor and at scale will be transformational.
]]>The venerable, UK-based RSA, which has been pioneering innovation for some 270 years, recently characterised this future as depleted, fragile and imbalanced, and outlined a new mission: to (re)design for life - to regenerate people, place and planet.
They envision a future where the global economic, social and environmental systems are mutually supportive, rather than destructive. A future where people, place and planet flourish in partnership, and where the focus has shifted from mitigating harms to ensuring doing good.
Knowledge gleaned from domains and disciplines beyond the business sphere, as well as historically, can guide the pathway to replenish and regenerate complex, connected systems. Key lessons include:
Economic and social progress is fuelled by innovation. Innovation also holds the key to meeting the challenge of replenishing social capital and tackling the climate crisis.
Nurturing entrepreneurs is crucial if innovation is to rise to the global challenges facing people, place and planet.
Businesses are organised groups of people and as such they are key change-agents economically, societally and environmentally. Arguably, owing to the assets and resources at their disposal, the largest businesses of today have the potential to deliver the greatest impact. The key, for businesses themselves, and for societies in general, is to ensure that they are change agents for good.
Awareness of the imperative for a social license to operate is becoming ever clearer, with many businesses now pursuing broader ‘purpose’ objectives. Leaders are focused on environmental, social and governance practices alongside the creation of economic value, and ESG considerations are assuming increasing prominence in business decision-making as companies rise to the challenge of tackling systemic problems from climate and energy to education.
Einstein famously said that today’s problems cannot be solved with the same level of thinking that created them, and history suggests he was right. Solving societal challenges through the centuries has typically relied on break-through technologies and break-out thinking. It has relied on imagining, or re-imagining, the world and then making that re-imagined world real. On creativity and innovation.
Innovation and creativity hold the key to the future flourishing of ourselves, our cities and places, and the planet. If you need help to unlock the innovation and creativity within your organisation, do get in touch.
]]>The global economy is encountering increasing levels of uncertainty and the global order, based on agreements, democracy, and individual freedom, seems under threat of imminent change to a yet undefined structure. Meanwhile scientific and technological advances, accelerated by next generation AI, are heralding a fourth industrial revolution; breakthroughs in genetics, biomedicine and healthcare; and a fundamental energy transition.
We are witnessing unprecedented times of disruption, and leaders more than ever need to be able to rise above the tyranny of the urgent and engage their teams to reimagine and redesign their business models for sustainability over the medium and long term.
Design leadership illuminates pathways to a sustainable future. The extraordinary complexity of our socio-technical systems in the connected, digital age calls for critical, holistic and systemic strategic thinking; the reframing of challenges as opportunities; and a systematic exploration of generating and exploring possible solutions. This is what designers are trained to do. The extraordinary challenges call for creative solutions, which are what design-led teams deliver.
Our human experience can be delightful, memorable, worth telling others about, build the reputations of brands and cities and drive the growth and flourishing of businesses. Organisations that excel at strategic design, grow revenues and shareholder returns at nearly twice the rate of their industry peers. In the absence of strategic design, customer experience can be woeful, but unfortunately, still memorable, worth telling others about, damaging organisational reputations and results.
Right now, in anticipation of Sydney Design Week, we are privileged to have a leading global polymath of design, Bruce Mau, in our midst and sharing his wisdom at my alma mater. A powerful advocate for design as leadership, Bruce launched the Massive Change Network to work with leaders at the highest level to envision more equitable futures. He seeks to empower people with the design skills, and imbue them with a designer's natural optimism, to redesign the systems that shape our human experience, and accelerate sustainable change and positive impact at scale.
Design, through its ability to imagine and visualize preferable futures, provides the inspiration and the leadership required to effect change. It has never been more critical to business, and the leading global strategy consultancies have all now built significant design practices in recognition that design drives the visible manifestation of strategy. The mission of the Massive Change Network is to bring the methods and power of design to the greatest number of people possible at the highest speed and lowest cost.
To explore how the application of design methods can inspire and drive a sustainable future for your organisation, get in contact.
]]>It’s not just the focus of business leaders. Asset managers and regulators are now laser focused on the environmental impact, the holistic systems impact, and the governance of the organisations that they invest in or grant permission to operate. In short there’s now an urgency for leaders to focus on ESG alongside assuring competitiveness, profitability and shareholder returns.
For those leaders who see beyond the need for compliance, who pursue innovation in strategy, in business model design and in ecosystem interaction, there are significant opportunities to reposition their businesses for advantage in this new context.
According to the Boston Consulting Group, there are nine attributes that underpin the design of a sustainable business model. They suggest that superior business models:
The majority of these attributes, at face value, could be considered generic prerequisites for the design of any business model to compete successfully in the era of platforms and ecosystems. The seventh and eighth make explicit that businesses need to explore how they can create the holistic sets of environmental and societal benefits that stakeholders demand in this new era.
A framework to guide this exploration considers six dimensions:
Sustainable business model innovation requires multi-disciplinary teams to explore these dimensions from both internal and external perspectives.
In a previous blog post explored the need to create value through social purpose. In the case of societal enablement, for example, this would entail assuring that governance and management mechanisms are designed to enable responsible leadership, shareholder democracy and equality of workforce participation alongside assuring that products and services are designed to with appropriate stakeholder input, social participation and due diligence.
Whilst there is an imperative to focus on creating environmental and societal surplus for stakeholders, this must be in tandem with creating sustainable business advantage and value for shareholders. Without a thriving, profitable company, you will not have the resources to create the desired societal impact and ESG performance.
Sustainable business model innovation requires exploring this intersection and identifying how meaningful environmental and societal surplus can be created alongside driving future differentiation and competitiveness.
Get in contact if you would like help to explore the design of a sustainable new business model for your organisation.
]]>But just as surely as internet technologies turned out to be a truly transformative, underpinning every aspect of how we live, work, shop and play today, there is a lot of smart money betting that metaverse technologies will transform how we live, work, shop and play in the future. Life in the metaverse age promises to be a fundamentally different sort of connected experience – one in which we feel truly immersed and present in the company of the people, productions and places that virtually surround us, and interact together in real time.
Moving from a digital age of two-dimensional interaction to a virtual age of three-dimensional immersion has the potential to impact everything from employee learning, development, engagement and collaboration to customer experience and community building, to the design of innovative products, services and business models across industries.
The metaverse sits in the very earliest phase of the Gartner hype cycle for emerging technologies in 2022, and the timeline of the evolution of the internet illustrates that the likelihood of realizing this new possibility will take decades. It’s taken 30 years of technological advances, the development of borderless social media platforms and mobile devices to achieve the world of connected experiences that we take for granted today.
The future of digital experience is immersive and ‘The Metaverse’ may eventuate as the ultimate expression of that. Meanwhile future focused companies are experimenting with new ways to engage a generation of customers already familiar with connecting within the virtual worlds of online gaming, where their customers control their identities and can transact with digital currencies.
Get in contact for help with exploring your role in creating this new age of human experience.
]]>Unlike forecasting - which aims to predict a single future - strategic foresight draws upon a range of quantitative and qualitative tools to tap into several different emergent futures that vary in their level of uncertainty. The use of the plural, ‘futures’, is intentional. The goal is to illuminate a range of possible futures that might eventuate, then identify a subset that are the most plausible, and within that the most probable.
Innovative companies create rather than react to the future. Informed by strategic foresight, they make strategic choices, pursue initiatives and communicate compelling narratives that increase the chances that their preferred future might play out.
A key input for developing foresight is maintaining a weather eye on the megatrends at play in the external environment. Megatrends are trajectories of change that are likely to result in substantial and transformative impact on individuals, organisations and societies. They typically unfold over years or decades and occur at the intersection of multiple interconnected trends that are narrower in scope.
Megatrends are underpinned by changes across the intersecting elements of our ‘macro’ environment: geopolitical, economic, environmental, social, demographic, and technological. Unpredicted events can lead to significant acceleration or delay in how they play out – such as in the rapid adoption of a range of digital technologies from ecommerce to telehealth driven by the COVID-19 pandemic.
By way of example, Australia’s leading scientific research organisation, CSIRO has just released a comprehensive review of the megatrends, first outlined a decade earlier, that are impacting the way Australian citizenry will live over the longer term. We’ve distilled the seven megatrends identified in the CSIRO report below:
CSIRO use these global megatrends to identify areas where they will focus their resources to solve the greatest challenges through innovative science and technology. Companies from start-ups and scale ups to large corporations, can adopt them as a blueprint to develop their own strategic foresight, and their capability to anticipate, respond and adapt to assure their long- term prosperity in the face of the threats and opportunities that these megatrends may present.
If you’re curious to dive deeper into understanding the megatrends that will impact your business, what aspects of your business may be at risk and how to prioritise exploration of where your most promising future growth opportunities might lie, get in contact.
]]>Innovation thrives when the mission is inspiring, the business constraints are clear, and when curiosity, creativity and new thinking are encouraged across the organisation.
To reset the environment for innovation, you often need to reset your direction and boundaries.
Firstly, your innovation effort needs to be tightly aligned to your overarching corporate strategy. If you don’t have a well communicated strategy, and an inspiring north star, then you will need to invest in ensuring you can articulate your winning aspiration. Depending on the size of your business, your innovation effort can then be articulated as one or more enduring missions in service of your strategy. Establishing an Innovation Council with the independent authority to prioritize the strategic opportunities for exploration in service of these enduring missions, and to secure the resourcing of these sets the foundations for the whole organisation to get up and running in the right direction.
Once everyone is clear on where to play, they also need to be clear on what level of ambition it’s going to take to win. If your mission is sufficiently bold and inspiring, it will rarely suffice to pursue continuous improvement programs that make incremental tweaks to your current operations or enhance customer experience. You must look beyond your organisation, and even the ecosystem within which you operate, to keep ahead of the disruptive forces that are surely out there at the edge. Your teams must be encouraged to bring to the innovation council bold new ideas for new products, services or ventures for evaluation and then granted the freedom and the resources to explore divergent concepts to realize these. As we've written about previously very different capabilities underpin creativity, invention and innovation.
Just as important as ensuring that innovation effort is clearly aligned to strategic missions, is ensuring that teams follow a disciplined innovation process that validates the desirability, feasibility, viability and sustainability of the new product, service or venture. Although innovation is the youngest of the management sciences, there are proven methodologies that every organisation should implement to de-risk the pursuit of innovation. Training your teams in human centred design, lean start up techniques and agile development methodologies is key to focussing precious resources and effort on what people really need, and that societies and the planet can sustain, and to minimizing waste through the process.
Moreover, it is vital to make transparent the criteria for assessing the attractiveness of different concepts, the allocation of seed funding and resources. Otherwise you will find that you are back at the start – with your team’s appetite for innovation stifled after not receiving feedback around the decision to pursue, park or dismiss their ideas.
If you would like help with any aspect of developing your corporate innovation capability, do get in contact.
]]>Where do you start when everything is changing so fast?
Firstly, remember that the successful achievement of any ‘transformation’ goal depends more on the engagement and enablement of people than the deployment of technology. That requires leaders to create three things:
Secondly, ensure that the impact of ‘transformation’ and ‘digital strategies’ conceived to address only discrete aspects of a business - the operating model, the product-service offering or the customer experience - are considered within their broader context. In order to thrive in the era of fourth industrial revolution, an ever more deeply interconnected future, it is essential to develop a systems view, and an integrated approach to transforming business models:
Organisations at their heart are powered by collectives of humans, and shifting to ‘transformation as usual’ requires a big shift in mindset for many senior leaders whose professional lives have spanned more stable times. But we humans have proved ourselves to be extremely adaptable through the current pandemic. When necessity demanded, we demonstrated the flexibility and moved quickly to make possible and to adopt everything from online shopping and education to remote working and tele-medicine.
Successfully prosecuting ‘transformation as usual’ of course requires careful selection, integration, delivery and deployment of new technologies over time that enable delivery of more valuable, reliable solutions to customer problems, drive customer engagement and loyalty, and capture business value whilst offering maximum optionality in envisaged future scenarios.
But moreover it requires ensuring that your organisation has a well-articulated strategy in support of a purposeful North Star; leaders who can communicate a compelling narrative, ensure that the transformation effort is holistic, and can identify the points of leverage to prioritise the work; and teams who understand how their contribution impacts the achievement of the whole and are empowered to collaborate and experiment towards creating the future.
]]>History points to successive waves of technological disruption that have dramatically impacted our lives, the nature of work and economies. Over the last decade or two, multiple waves across several distinct technologies have been developing concurrently, and are about to crest, leading to veritable tsunami of change.
Layered on top of these new technologies of the fourth industrial revolution, the current global pandemic has resulted in the ‘great acceleration’ of several disruptive trends that were already in play, from a step-change in ecommerce penetration, to the embrace of remote working and adoption of tele-health.
Rick Steele, CEO of the Australian based, global fund manager Loftus Peak, which invests in disruptive innovation, shared this insight in a recent article in the AFR:
“Never in my working lifetime have benchmarks been less relevant. An index reflects past success among companies. Future success is far less certain in disrupted markets. The index will not pick up unheralded companies or the next generation of winners. You need active fund managers who can identify that disruption”.
This perspective reflects the same tension that often derails growth and prevents focus on truly strategic innovation within organisations.
You cannot rely solely on data, which necessarily has been generated by activities in the past, to either accurately forecast your future performance, or inform your future strategy.
If you’re not actively exploring what’s happening at the edges, you risk becoming aware of new threats to your current business model only when it’s already too late to catch the new wave of opportunity.
It has never been more necessary for leaders of established companies to adopt the same approach as the venture capitalists who place a wide range of bets across a portfolio of promising start ups, or the fund managers investing across a portfolio of market listed scale ups, leveraging these new technologies to deliver innovative propositions through novel business models.
Certainly, you must invest in analytics and interrogate and augment your proprietary data optimize your current business. But you must also invest in developing your strategic foresight, your ability to ‘see around corners’, to imagine and experiment across a range of ideas that have the potential to create your future growth.
Dashboards and performance reporting are the output of the equivalent of ‘passive managers’ - can provide a false sense of security. Even a trend line that is still heading ‘up and to the right’ today will not pick up the fact that the next generation of winners are making accelerated progress in your wake.
In times of accelerated change, more than ever you need to enlist the skills of ‘active managers’ - innovation strategists, strategic designers and subject matter experts across disciplines - deeply aware of shifting market preferences and global megatrends, expert in systems thinking, well informed around the strategic potential of emergent technologies, and able to collectively invent the new business models that they enable.
By now it must be abundantly clear that, in order to survive, every established organisation needs to embrace digital technologies to transform the key elements of their business model, whether within their core operating processes or activities, their product offering and platform, their go-to-market model or, for many, all three.
But that won’t be sufficient. One of the biggest shifts that the digital era has ushered in is the collapse of industry boundaries and the formation of new ecosystems of value. You only need to consider Apple to realise that twentieth century thinking, that constrained strategic ambition within industry silos, for example to financial services, media, or consumer goods, is redundant in the twenty first century.
As we accelerate into the ‘post-digital’ era, the opportunities for where to play are unbounded spaces where those with laser-like consumer insights can address the needs of their target market across a suite of the most strategically compelling arenas.
Prospering through the next decades requires you to explore the possibilities of the next wave of enabling new technological platforms - from Artificial Intelligence and Robotics; Augmented Reality and the IoT enabled Metaverse; a spectrum of Biotechnologies; Blockchain; 3D Printing; to Energy storage.
You can choose to view changes in technology, operating environment or society as a threat or an opportunity. In the face of rapid change across all three, it has never been more imperative to embrace a mindset of ‘active’ exploration – curiosity-fueled, collaboratively-conducted, and customer focused – in order to catch the next wave.
]]>The current pandemic has placed our collective future firmly under the spotlight. What we are experiencing in the present is the result of decisions and choices made decades ago. And we're perhaps more acutely aware than ever that it is the decisions that we make today and actions we take now that will shape our futures.
As a leader how do you help your team and your organisation imagine what is desirable, what you might want to avoid, and what you need to prepare for?
Developing future foresight that enables scenario planning requires a similarly disciplined approach to innovation. The following generic, six-step approach is adapted from that developed by The Institute for the Future, and shared under CC.
Engage in conversations within your organization and across your ecosystem to discover the wide variety of lived experience and perspectives that inform a well-imagined story.
Treat history not a rigid lesson, but a prompt for your imagination. An expanded awareness of the past can inform new stories for the future.
There are small signals - concrete events, data points, technological developments - all around us that point to what’s possible in the future.
The patterns from the past and present and the signals from the future reveal choices that must be made and that will determine your future.
As the current pandemic is illustrating, variation in what is valued has resulted in very different outcomes in the initial Response phase of an unanticipated crisis.
The Reset phase must consider the broader perspective, and rebuild collective stability in this case in a global ecosystem.
The Reinvention that follows should be the result of deep exploration of how different choices might result in the four archetypal future scenarios of Growth, Constraint, Collapse, and Transformation.
You need the capability to recognize early signals, longer term patterns and harness diverse perspectives. You need data but you won't change the world with data. You change the world through discourse, language and emotion. You mobilize your organisation and those within your ecosystem through creating and sharing stories of a future that speaks to your collective values. Tell a great story, and others will help build that future.
]]>Unfortunately, the very word 'change' is often as poorly defined as the word 'innovation'. A wide range of business decisions are often conflated under the umbrella of 'change and transformation', and a recently published article advocates that we "change how we think about change".
It suggests that change should be differentiated according to three very different strategic responses to business challenges, a proposal which aligns with how we think about the three levels of innovation ambition:
Magnitude: change to enhance execution of your current path, to make gains through productivity improvements and incremental growth initiatives – core innovation
Activity: change to adopt new ways of pursuing your current path, through changes to your business model, market or product focus – adjacent innovation
Direction: change to an entirely different path, exploring the opportunities in entirely new arenas, seeking breakthrough innovations – transformational innovation
It's worth noting that the common use of the phrase 'digital transformation' within established corporations can muddy the language here: the majority of such programs are designed to enhance execution, and some to deliver new ways of conducting various activities to better forge ahead along the same path. What 'digital transformation' programs are not designed to deliver is 'transformational innovation', complete changes of direction.
The key question for business leaders is to identify the nature, scale, and timing of the change that is appropriate for their company’s specific context. And that requires you to answer two fundamental questions of your strategy:
Having determined how your strategy measures up against these two key questions, you can then assess the type of change / innovation effort that is required:
A healthy innovation portfolio will incorporate an appropriate weighting of initiatives across this spectrum. Diagnosing the appropriate change required for your organisation at any given time, and the concomitant level of innovation ambition, is critical to determining the right form of change / innovation initiatives to deliver the optimal outcome.
]]>When physical storefronts, service centres and offices are unavailable, your customers, and potential customers rapidly expose the shortcomings, or, if you’ve invested appropriately, extol the virtues of, your digital experience.
And by appropriately, I mean in a way that the deployment of new technologies has been guided by deep human insights, and the true drivers of value and satisfaction validated through data-driven experimentation. The world is littered with projects where extraordinary sums have been wasted delivering experiences that no-one enjoys or fall short of the mark.
The twentieth century industrial paradigm conditioned customers to accept standardised, mass market products and services in exchange for affordable prices. Artisanal products and personalised experiences, the only offerings in the nineteenth century, became the preserve of the very wealthy. Then at the dawn of the twenty first century, customer expectations were changed forever by the ability of business from Amazon to Netflix to deliver both mass personalisation and value to the long tail of individual preference.
The rise of platform business models and the shift to operating within new ecosystems of value rather than in linear value chains means that, for many organisations, their capability must evolve beyond designing and delivering a competitive customer experience, to designing and delivering a compelling experience for all ecosystem participants - consumers, producers and partners.
So what capabilities need to be developed in order to successfully compete on experience?
It starts with aligning your experience goals with your overarching strategy and business goals. It requires you to invest in and implement systems with which to capture and consolidate a multitude of unique ecosystem participant data points and create a single participant view shared across the company; to develop the collaborative culture, structure, system and skills to support agile ecosystem participant management; to identify and deeply understand and the touch-points that matter most to customers; to build appropriately immersive, personalized and automated experiences; and to be able to measure, iterate and optimise over time.
Recently released research by ESI Labs for ServiceNow, a digital transformation platform leader, found that of the trillions of dollars invested into digital transformation projects, the majority has been targeted at delivering back-stage efficiencies, rather than exceptional front of house experience, to extend the theatrical metaphor. The number of companies that are prepared to compete on their ability to offer great digital experience to their customers is surprisingly small.
The survey identified that the strongest capabilities of leaders also exhibited the widest gaps to followers
For those organisations yet to get started on transforming their digital customer experience, you could argue that the news isn’t all bad. Newer technologies such as AI and voice assistants are transforming the landscape; we have the capability to capture and infer sentiment from unstructured data as well as the implied action of structured data; and the price of access to all this technologies is cheaper than ever.
But there is no time to waste. Within three years:
And, as we've outlined, for many organisations, the next shift will demand that you understand the needs and design the appropriate experiences for not just customers, but for a variety of ecosystem participants with potentially conflicting goals. It requires you to deeply understand both their motivations for value exchange and their expectations of how transactions should be brokered.
Being treated as one of the masses, and not recognised as an individual, is no longer acceptable as a consumer. Being similarly recognised as an individual producer or partner within emerging ecosystem of value is the new frontier.
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Innovation is something that leading companies like Amazon practice every day, when they are winning in the marketplace, rather than a thought they have only when their top and or bottom line are under threat. There can be no doubt that we are living in volatile, uncertain and turbulent times right now:
Organisations are facing even greater disruption than that wrought by the first wave of digital technologies but also with extraordinary opportunities to transform existing - or design entirely new - business models, product offerings, customer experiences and ventures.
There is little 'business as usual' in times of turbulence. 'Transformation as usual' is the new normal. It's a journey with milestones, but without end-point, towards your 'north star'. And the speed with which you must progress along that journey is only being accelerated by the current global pandemic.
Incremental thinking and improvements to your current business will not be sufficient through times of turbulence. Only those organisations that develop a systemic approach to continuous innovation will continue to prosper.
Your organisation probably has a goal to be more innovative. But what does that really mean? It's not solely about generating ideas. It doesn't stop product development.
Innovation is the entire process through which products, services and experiences that were not previously imagined, and which create value for both consumers and society, and the organisation, are designed and delivered.
Innovation requires the involvement of multi-disciplinary teams and a blend of art and science; of creative design craft and business savvy; and an astute understanding of customers and markets.
Over the last twenty years, design-led and evidence-based methodologies have developed rapidly to overcome the shortcomings of purely analytical approaches, and deal with the increasing complexity of the interconnected systems within which organisations operate.
With a disciplined approach, you can significantly de-risk the entire innovation process and significantly increase your chances of success.
Research consistently proves that organisations with higher level innovation capabilities outperform their peers and that having the systemic capacity to innovate is the only path to sustainable growth and ongoing prosperity.
The challenges presented by today's business context and the exponential rate of change can seem overwhelming. But there's no time like the present to get started on securing your future. If your team doesn't have the innovation capability to prosper through turbulent times, help is at hand.
]]>The Fourth Industrial Revolution (4IR) is characterized by concurrent advances and an interplay of technologies that is blurring the lines between the physical, digital, and biological spheres. Not just a digital revolution but a bio revolution. Having focused on the key digital technologies last year, now, with the attention of leaders of organisations across the world focused on a virus, it seems appropriate timing to consider the equally transformative potential of biotechnologies.
Biotechnology, similarly to Artificial Intelligence (AI), is an umbrella term covering a wide range of technologies with various taxonomies. A new McKinsey Global Institute report grouped these into four areas:
Whilst the latter two are still nascent fields of scientific enquiry, early applications leveraging bio-molecular and bio-systemic innovation already exist in market: gene therapies for mono-genic diseases such as sickle cell anaemia; lab-grown and plant based meats; leathers produced by mushrooms, aviation fuel derived from mustard seeds; direct to consumer genetic testing to inform health and wellness regimens. But beyond these, hundreds of applications have been developed to proof of concept and could plausibly achieve the tipping point for commercialisation at scale within the next couple of decades.
Disruptive Potential
The 'bio revolution' could transform entire value chains, and companies in virtually every sector may need to adapt their strategies.
The same report estimates that 45% of the global disease burden could be addressed by applications that are scientifically conceivable, but that two thirds of the estimated 4 trillion USD direct economic impact of biotechnological innovation will be captured by applications beyond human health and performance (‘red’ / medical biotech).
The arena of agriculture, aquaculture and food (‘green’ / agricultural biotech) offer equal potential for economic impact. Whilst the arenas of material and energy production (‘white’ / industrial biotech) could be transformed beyond all recognition. Over the longer term, 60% of physical inputs to the global economy could, in principle, be produced biologically, reducing carbon emissions, whilst applications for government and defence are no doubt advancing in stealth mode.
In the arena of direct to consumer products and services, opportunities for more precise, personalised wellness, nutrition, fitness, beauty and anti-ageing offerings enabled by the capture and analysis of biological data look set to proliferate, with upstream and downstream impacts on industries from insurance and finance to entertainment.
Commercialisation
Incumbents across industries should brace for competition from a new generation of bio-native start-ups.
The transformation that the bio-revolution will drive is in many ways analogous to the digital transformation that has been in progress for the last couple of decades. It took a pandemic, but today almost every business has recognised that it needs to be a digital business. In the not too distant future, every business may need to be a bio-business. Cross-disciplinary by nature, businesses will likely need to co-operate within new ecosystems to access the new resources and capabilities required as biotechnologies impact supply chains across industries. And, as with the digital revolution, some should consider how to use platform-based business models to seize cross-sector opportunities and drive innovation by leveraging the new era of biological big data.
As is currently being highlighted, when it comes to biology, it generally takes many years of research and very considerable investment to develop an idea through to proof of concept, the point at which a product or service is scientifically feasible. The failure rate for new biotechnology development is high, and regulatory compliance requirements higher still.
Market Adoption
The potential impact of these transformative biotechnologies will be very largely influenced by consumer, societal and regulatory acceptance.
Capturing and utilising personalised, ‘multi-omics’ data – the data generated by genomic, metabolic, micro-biomic and other intra-cellular processes - carries inherently greater risk and reward, and poses greater ethical questions, than that that of personal transactional data, already creating significant tensions between privacy and personalised product / service delivery.
As with the digital revolution, the rapid advances in artificial intelligence (AI) and machine learning technologies, together with capabilities such as for increasingly rapid and cost effective genomic sequencing, are enabling us to process this wealth of data. From there we can begin to address the challenge of discerning actionable insights, and delivering on the promise of truly effective prevention, diagnosis and treatment of cancers; personalised medicine, nutrition and lifestyle service; optimising agricultural productivity and quality; and the distributed biological production and processing of new self-repairing materials.
Bio-technologies may well in time determine what we eat, put on our skin, whom we date, what we wear, how we build our physical infrastructure and power our every activity.
]]>This is still one of my favourite quotes, from over a decade ago, attributed to Darryl Rigby of Bain and Company. That’s the thing with innovation. It’s both an art and a science. And despite an abundance of ideas and ‘innovation’ activity within many large organisations, without leadership at the C-suite level, clarity of overall strategic intent and ambition, robust innovation portfolio management, appropriate governance mechanisms and a supportive culture, the returns on activity can be very disappointing.
When it comes to innovation portfolio design and management, it is imperative to recognise the dichotomy in the approaches, skills and metrics required to explore, test and develop new products, services, value propositions and business models; and to scale, optimise and exploit those that already exist within the organisation.Large corporations are generally masters of the latter. Having developed a desirable value proposition, built, borrowed or bought the means to deliver it, and designed a viable business model, they focus, structure and manage for efficiency in execution and predictability of earnings growth. Yet without an equal focus on exploration, which requires a focus on search, and an embrace of messy, iterative experimentation and learning, many such corporations face irrelevance as start-ups with more attractive propositions rise to take their place.
The portfolio mapping tool developed by Alexander Osterwalder and the team at Strategyzer promotes clarity of thinking around the imperative for this ambidextrous approach at the portfolio level.
Subjecting innovation initiatives characterised as ‘exploration’ to the same hurdles as would be required to secure organisational resources for an ‘exploitation’ project is clearly misguided. All the data in the world can only tell you about the past. We have no data about the future, and forecasts can be both wildly inaccurate and manipulated to support a resident hypothesis or business case. That is not to say that both portfolios shouldn’t be subject to a detailed level of scrutiny. Or indeed the same overarching requirements of strategic fit and opportunity. They absolutely should, but the focus required is very different.
Ideas that build up sufficient evidence that they are worthy of the corporation’s investment and support for a full launch to the open market can then be transitioned, with great care, from the management of their nurturing and curious creators to those with the expertise to further optimize for efficiency and scale for growth.
For every product, service, value proposition and business model that is currently in market, there must be regular an ongoing evaluation of the strengths and weaknesses in relation to the competition, and of the trends driving emerging opportunities and threats. Without a similarly systematic and dynamic, portfolio-based view of these, they too readily succumb to disruption.
It’s not news that the success rate for new products and services is directly related to the robustness of an organisation’s portfolio management processes. But the vast majority of frameworks were developed for the 20th century, when competing on products and services alone was sufficient. Organisations today increasingly need to compete not solely on products and services but on business models.
Employing the dual explore and exploit approach to portfolio mapping, brings explicit and vital management focus to every aspect of delivering new. and maintaining the competitiveness of existing, products and services.
]]>Established businesses are prone to focusing primarily on viability, requiring lengthy business cases that indicate the potential for a new product, service or venture to generate a profit, accompanied by feasibility studies that outline how that product or service can be created, ideally using resources and technologies either resident within the organisation, or acquired from or through partnering with others.
Start-ups can be prone to focusing on the feasibility of a new product or service that an emerging new technology might confer, but are prone to failing to evaluate whether their envisaged new proposition is sufficiently desirable to drive customer adoption at a scale and profitability to make it viable.
Given the extraordinarily high failure rate of new products and services in either setting, during this century, ‘design thinking’ has permeated the business thinking of leaders across the globe. Successful entrepreneurs and organisations have embraced the notion that establishing desirability, the extent to which the intended user or target market sees value in the new proposition, is prerequisite to any in-depth evaluation of feasibility or viability.
But we now inhabit an infinitely more connected world than we did at the turn of this twenty-first century. And we are now reflecting critically on the unforeseen impacts that many of these new digitally enabled products and services and disruptive innovations have had, not just on our own lives, but on those of others and on our economic and ecological environment.
More than ever before, we are beginning to appreciate that we all live and work within a nested series of ecosystems: our organisations sit within local and allied industries or bodies, global supply chains and economies; we interact within our local communities, broader society and as global citizens. More than ever before, we are beginning to understand that the sustainability of multiple systems is now threatened.
The future does not invent itself. We humans are the designers of every artificial construct in our world, the inhabitants of these ever more interconnected ecosystems. So how might we ensure that what we design for the future is desirable for not only for the intended consumer, but considerate of the impact on all stakeholders, on society and sustainable within the broader system?
Focusing on desirability for a discrete intended group of primary users or consumers is clearly necessary but not sufficient. Considerations of Equitability and Sustainability demand explicit attention.
For a new product or service to be equitable, it must deal fairly and honestly with all concerned. In essence, it must consider how might shared value and future benefit will be created for all those impacted by the provision of the new product or service, not just the intended user or consumer.
And for a new product or service to be sustainable, it must not harm and hopefully improves the environments within which it is generated and consumed.
Equity is not the same as equality. Systems with a focus on creating equality aim to ensure that the inputs are equally distributed. Systems with a focus on creating equity are those where the outcomes are fairly shared, either through inputs being appropriately distributed, or through the removal of systemic barriers. And the creation of equity in a system must be sustainable as the environment changes.
For many design practitioners,sustainability and equitability may have been an implicit consideration within desirability. But for commercial organisations, explicitly elevating Sustainability and Equitability to the same level of consideration as Desirability, Feasibility and Viability may be essential to assure their 'license to operate' in the future, and in shifting our thinking from human centred design (HCD) to ecosystem-centred design (ECD).
]]>Much has been written about the need to review the capitalist models and the need to shift to ‘profit with purpose’ models that create ‘shared value’. Yet the rationale for creating shared value (CSV) is sometimes poorly understood, with many leaders fail to distinguish it from corporate social responsibility (CSR).
Creating shared value involves creating economic value in a way that also creates measurable value for a community or society at large, by addressing its needs and challenges, tying organisational success to social progress. It is a philosophy that is central to a company’s operation, not a set of peripheral tactics designed for remediation or redress.
An early and powerful example of creating shared value can be found in the story of Chobani, whose purpose is “better food to more people”. Founder Hamdi Ulukaya grew up heading sheep and goats in Turkey, emigrated to the US, got a business education, and was running a small cheese factory when he went to see a dilapidated yoghurt factory being closed down sold off for a song by Kraft. He was inspired by the pride and skills of the staff facing imminent redundancy and felt compelled to act to save the local community.
He bought the asset in 2005 with a loan and started making the now well-known Greek-style yoghurt which quickly resonated with an increasingly health conscious market. He hired back all the original workers, worked closely alongside them, gave them a stake in the company. And as the business grew and profits flowed, he built new community facilities which were valued by employees and their families. By 2012, Chobani's revenue exceeded $1 billion, it was the leading seller of Greek yogurt in America and had invested in operations in Australia.
Ulukaya speaks to the difference between creating value for shareholders and shared value as the difference between profit and true wealth. He insists that the employees who help to build companies shouldn’t get left behind whilst the CEO gets ahead. He believes that a CEO should report to the consumer, not the shareholder. And that if you have a great product, and treat your people fairly, you will build an engaged community, nurture innovation and drive profitability.
So, how might you set about developing a new business model to create shared value?
Organisations that cling to operating models forged in the last century and focus solely on creating shareholder value would do well to heed the winds of change. As Larry Fink, CEO of Blackrock, the largest investment manager on the planet stated, “society is demanding that companies, both public and private, serve a social purpose. To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society”.
When employees find connection between their own purpose and that of the organisation, the very notion of ‘work’ is fundamentally reshaped, engagement soars and achieving ‘balance’ is that much easier.
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But to be strategically valuable, those advantages must be sustainable in such a way that they become enduring. The foundations of such strategic competitive advantage lie not in your organisation's products, and whilst your tangible assets and resources may be significant, they are arguably the easiest for competitors to imitate. Sustainable strategic advantage lies in the complex and hard to imitate relationships between human and intangible resources, and the interactions and processes that develop over time between these.
Typically, strategic advantage is founded on a combination of:
Amazon is an exemplar of an organisation that has built strategic competitive advantage through such a combination that has innovation and creativity at it's core. It has become a serial innovator, with the capability to invent, and reinvent, its business models, products and processes such that it has disrupted whole industries.
In his 2019 letter to shareholders, founder Jeff Bezos articulates a further fundamental source of competitive advantage - their responsiveness to change that is closely connected to their innovation culture. Arguably one of the leading exponents of the entrepreneurial mindset of our era, he has built a company of builders - one that develops truly strategic managers and empowers them to identify opportunities or threats, and to act fast.
“From very early on in Amazon’s life, we knew we wanted to create a culture of builders – people who are curious, explorers. A builder’s mentality helps us approach big, hard-to-solve opportunities with a humble conviction that success can come through iteration: invent, launch, reinvent, relaunch, start over, rinse, repeat, again and again. They know the path to success is anything but straight.”
And of course with superior access to digitised customer information and preference, Amazon led the world in developing artificial intelligence that could interrogate and derive insights from big data and the algorithms that would be create value for both customers and the business.
Last year, Bezos told employees that “Amazon is not too big to fail” and predicted bankruptcy, pointing out the ever shortening life-span of large companies. Amazon continues to innovate whilst successful, not waiting until its failing, and is held up as an archetype of what innovation thought leader Alex Osterwalder calls an invincible company. Amazon has developed the capability to sustain strategic competitive advantage.
So, do you know what your source of strategic competitive advantage is today? And moreover, will that be sustainable and sufficient to support your strategic goals in your likely future operating context?
]]>There’s a very big difference between asking for ideas, and asking for innovation: if you are to be intentional about driving innovation, the first step is to establish a common language.
You also need be very clear about the different levels of innovation ambition, what they entail, and the how the approach to these differs. There's a vast difference between asking your team to optimise the known and to invent the future.
The more ambitious your innovation intent, the greater the need to develop the capability of your entire workforce to execute it. So how can you build systemic innovation capability?
Innovation effort within larger organisations rarely fails for a lack of ideas, but for the lack of capability to develop those ideas into desirable concepts, into feasible propositions, and around these to design business models that make these propositions viable, that enable them to not only create value for the customer but capture value for the organisation.
]]>Smart businesses are evolving from merely offering up their products and services only when customers seek them, to developing strategies for maintaining an ongoing connection and the capabilities for proactively or predictively supporting them with support and solutions appropriate to their every contextual requirement.
Together with worrying about what they might lose, the most important consideration for customers contemplating a change is often the amount of energy (their time and resources beyond financial outlay) they need to expend on the job to be done. Making a switch friction-less and the experience delightful and useful are critical drivers of acquisition and adoption.
But in today's digital era, changes are also significantly tempered by a further concern: increasing anxiety about data privacy, and who to trust with its safekeeping.
This tension between the possibilities of hyper-personalisation and the preservation of privacy is an important determinant of consumer choice. For some, the possibilities of the Internet of Things (IoT) and Artificial Intelligence (AI) to enable the complete outsourcing of timely product and service provision, freeing their brains from dealing with much of the minutiae of modern living will be readily embraced. Others will want to retain full control. Most today fall somewhere between these two extremes, and of course their position is contextual: they might be tempted, but can you be trusted?
Wharton professors Nicolaj Siggelkow and Christian Terwiesch advocate that businesses consider the following when developing customer strategies for the connected era:
Well designed and executed, connected strategies can deliver better customer experience, boost operational efficiencies and lower costs, whilst research has established that higher digital trust correlates with higher revenue.Businesses must both understand the extent to which constant connection and the possibilities it enables is desired, and enhance their digital trust credentials.
Design thinking is a powerful approach to developing a nuanced understanding of different customers’ mindsets but, as recent Frost and Sullivan research identified, businesses must recognise that transitioning them does not happen quickly. It will require organisations to be concise and candid about how they protect data, share or sell data, and how - or if - consumers who pay for products and services online can permanently opt out from data sharing.
We all exist along a continuum between trust and distrust in a business’s ability to interrogate our data for our benefit. With implicit trust, consumer facing brands and businesses may be granted access to our personal data with which to support our goals over the journey of a lifetime; without it they may be relegated to an occasional, episodic provider.
]]>Powering this wave are the ever-increasing billions of smart devices, products, machines and infrastructure becoming connected as the Internet of Things (IoT). Concurrent advances in adjacent technologies including Artificial Intelligence, Augmented Reality, 3D Printing and Blockchain which are amplifying the scale of the transformative impact and the merging of our real and digital worlds.
Leaders within established organisations are still responding to the current wave of digital technologies, the resultant disruption to their business models, and cybersecurity risks inherent in their digital transformation. As individuals we are reflecting on the loss of personal privacy and the overwhelming demands on our time and attention of a constantly connected existence. But, as the ‘S-curves’ of social, mobile, analytics and cloud technologies plateau out, we must prepare for the this 'post-digital’ era.
Every business needs a clearly defined strategy for where to play and how to win and, for strategists, an understanding of the competitive implications of these transformative new technologies is essential. They are not only enabling fundamentally new ways to compete but creating entirely new playing fields.
The benefits of today’s internet have proved largely asymmetrical, with the value of the personal data of billions captured by a few now gargantuan organisations: Facebook, Apple, Amazon, Netflix, Google in the West. Baidu, Alibaba, Tencent to the East. Inequality has been widening since the dawn of the computerized age that ushered in the last revolution, leading us to the current inflexion point in the evolution of our globalised society, where the economic and political discourse has become fractured, and capitalism called into question.
Arguments that these new technologies will underpin a new era of productivity, satisfaction and prosperity may well prove true but are not entirely credible for an anxious populace, wary of machines that are becoming self-aware, social and perhaps one day sentient. It is incumbent on leaders not to accept technological determinism, but to interrogate and anticipate the nature and risks of this next wave of technologies, and to consider the role their organisations can play in harnessing their potential for the benefit of all stakeholders.
New value creation will increasingly be achieved through collaborating in entirely new ecosystems, whose value is defined by the depth and breadth of their data. Speed of learning is today’s competitive advantage and organisations can learn much about the strategies for success from today’s platform leaders. Visionary leaders are needed to navigate the highly ambiguous environment of this next revolution, to cultivate creative experimentation at speed towards a purpose, and to balance competition and co-operation as national borders give way to new crypto-economies.
]]>Prior posts have considered the impact of the Internet of Things (IoT), Artificial Intelligence, Augmented Reality and 3D Printing, concurrent waves of adjacent technologies that are amplifying the scale of the transformative impact and the merging of our real and digital worlds.
Blockchain is a foundational, distributed ledger technology that promises immutability, is revolutionising record keeping and enabling self-executing smart contracts. If immutability can be guaranteed, which is dependent on the control of superior computing power, then trust can move beyond personal connection and the auspices of institutions, paving the way for open and transparent transactions without the need for intermediaries.
In its infancy but developing rapidly, blockchain technology has the potential to be the foundation for a ‘second generation internet’, and intranets, with applications that drive new economic growth, similar to and as transformational as the TCP/IP backbone that underpins today’s internet economy.
In a digital, globalised world, with all the concomitant concerns of authenticity, biosecurity and money laundering, blockchain technologies can enable rapid, cost effective identity management, asset tracking, compliance and certainty of transaction completion. Where the internet enabled low cost peer-to-peer exchange of information, blockchain enables low cost peer-to-peer exchange of value.
Providing horizontal coordination mechanisms, blockchain enables truly globalised markets for provisioning and consumption, driving to lowest possible cost, and removing redundancy in industry verticals. Fundamental issues of scalability will be addressed through new protocol layers, paving the way for creative destruction on an epic scale. In enabling the world’s producers and consumers to enter into trusted transactions at low cost, blockchain’s impact lies in creating greater shared value throughout societies.
The most visible proof of concept for value exchange are cryptocurrencies such as Bitcoin and Ethereum that run on their respective, eponymous blockchains. Ethereum is distinguished by its ability to support smart contracts and has by far the larger developer community. Microsoft, Amazon, Google and IBM have all released cloud-based development platforms and offer blockchain as a service. And experimentation with ‘next layer’ protocols to unlock the promise of peer-to-peer value at speed and scale are underway. But whilst the ecosystem is growing rapidly, notably in financial services, adoption at transformative scale is years ahead.
Without compelling applications and accessible user interfaces, use of the initial internet was largely confined to the founding scientific and academic institutions. It was next layer developments, such as email and web browsers, with clear value propositions for business and consumers alike, that saw the internet become an almost indispensable part of the everyday life. Blockchain may play out similarly.
]]>Prior posts have considered the impact of the Internet of Things (IoT), Artificial Intelligence and Augmented Reality and a final post will review Blockchain.
The terms ‘3D printing’ (3DP) and ‘additive manufacturing’ refer to seven different technologies through which materials are solidified or joined to form physical objects from digitally created models. No longer a painfully slow process relevant only for bespoke production, complex products can now be created in minutes not hours, at costs competitive with mass production.
Moreover, multiple materials can be laid down in a seamless process to produce SCPs - electronic circuitry, sensors and all. We are on the cusp of realising the transformative promise of 3DP at industrial scale, whilst 4DP, which uses materials encoded with dynamic capability, is coming.
The detrimental impacts to ‘developed’ societies resulting from the globalisation of supply chains are causing a rethink and reversal of previous century outsourcing and offshoring practices. The maturation of 3DP is a timely enabler towards (re)building manufacturing capability across all nations and of more sustainable approach to manufacturing for our resource constrained planet, enabling a shift from “designing for ideal manufacturing to manufacturing the ideal design”.
Where the internet ushered in atomic models for information, 3D printing ushers in atomic models for objects and a new era of pan-industrial competition where the strategic choice is one of scope not focus. With the right tools and raw materials, factories anywhere can manufacture not just parts but complete products for any number of industries, and continually iterate and tailor these in response to market demand. The platform opportunities are significant.
3DP has been around for decades, and marketplaces support an ecosystem of small-scale makers to flourish. For large-scale manufacturing companies, the transition to 3D printing requires investment in re-tooling, in CAD software, and in industrial designers who must abandon the tenets of geometry and simplification, and instead seek inspiration in complex bionic structures.
In both B2C and B2B markets, the barriers to adoption of 3DP as a production method are minimal given the level of personalisation that can now be delivered economically. That production can now be located proximately, within national borders or even in the neighbourhood, aligns well with ever-increasing expectations of instant delivery, desire for local provenance, and concerns for resource sustainability.
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